November 21, 2008

Bahrain signs exploration deal with Thai PTT Exploration

Gulf Daily News reported that Bahrain has signed a new oil exploration deal with PTT Exploration & Production, hoping that the contract will bring a wave of oil discoveries after 75 years. PTT Exploration & Production will operate Block 2, located offshore in the north of Bahrain which covers about 2,228 square kilometers.

Dr Abdulhussain Mirza oil & gas affairs minister of Bahrain has signed an exploration & production sharing agreement with PTTEP, under which it will be drilling two wells offshore in the Khuff formation. He added that the total exploration period will be 6 years and in case of a discovery, the production term will be 24 years.

Dr Mirza said that the soaring cost of oil, which this year hit USD 100 per barrel, meant even a small or medium sized discovery made the project economically viable. He is confident the project will be successful and pointed to PTTEP’s track record in establishing international ventures in Iran, Algeria, Egypt and Oman.

Mr Khun Mrigadat president of PTTEP said that it is unlikely to start drilling until 2009, when it has completed a geological study and seismic survey of the area at a cost of USD 13 million.

Thailand’s PTTEP and US major Occidental were awarded exploration rights last year to explore three out of four Bahraini blocks. Occidental will operate Blocks 3 and 4 to drill three wells to the Arab Formation. Block 1 will remain for future bidding.

In 2006, Bahrain produced about 35,000 billion barrels per day of crude oil. Its proven oil reserves stood at about 125 million barrels as of January 2007. Over the years, Bahrain has been slow to explore for oil in its offshore waters. Unlike most GCC countries, Bahrain imports about 225,000 billion barrels per day of Arab Light crude oil from Saudi Arabia, for which it shares production via a subsea pipeline linking the two countries.