Analysts: Oil Discovery Won't Yield Significant Economic Windfall for Bahrain

2018-04-23 - 7:38 p

Bahrain Mirror: Oil and gas analysts at BMI Research said that they do not expect Bahrain's recent discovery of a large oil and gas field to yield a "significant economic windfall" for the country.

"Extraction will be fraught with technical difficulties, pushing up operating costs at the field, such that the government will have to provide generous contract terms to partner companies," the analysts said in a brief research note.

"We believe this will limit prospects for a significant boost to the country's fiscal revenues and balance of payments dynamics. As such, we maintain our view that Bahrain will continue to face significant economic headwinds," the analysts added.

BMI, which highlighted that typical onshore reserves in the Middle East have an extraction cost of around $10 per barrel, said the extraction cost for the newfound resources is likely to run close to between $75 and 80 per barrel.

"This leaves little room for the major oil companies to profit in the current low oil price environment," the analysts said.

"These slim margins will likely put severe constraints on the scale of the extraction unless oil prices gain greater momentum," they added.

Arabic Version


: Bahrain Mirror