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Bahrain-Petroleum Industry

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Bahrain Index


Figure 7. Lower Gulf States: Oil Fields, Gas Fields, and Refineries, 1993

In 1929 the San Francisco-based Standard Oil Company of California (Socal)--now known as Chevron--set up a subsidiary to acquire an oil exploration and production concession on the island of Bahrain. Socal drilling crews discovered oil in 1932, and two years later the first shipment of crude oil was exported from Sitrah. By 1935, when sixteen oil wells were in production and construction of the Bahrain refinery commenced, the royalties that Socal paid to the government constituted more than 40 percent of the state budget. In 1936 Socal sold half of its oil interest to Texas Oil Company (Texaco) and, with its new corporate partner, formed the Bahrain Petroleum Company (Bapco). In the years up to independence in 1971, Bapco oil revenues annually averaged 60 percent of government income and helped to finance major development, education, and health programs. The government of Bahrain acquired a 60 percent interest in Bapco in 1975 and assumed control of the remaining 40 percent in 1980.

Bahrain's proven oil reserves are limited in comparison with the extensive oil fields of Kuwait and Saudi Arabia. As early as 1965, Bapco estimated that one-half of the island's total oil had been depleted. Oil production peaked in 1977 at 77,000 barrels per day (bpd--see Glossary) and steadily declined thereafter.

During the 1970s and early 1980s, two developments helped to maintain the government's relatively high income from oil revenues despite declining production. First was Bahrain's share of profits from the offshore Abu Safah oil field in the Persian Gulf between Bahrain and Saudi Arabia (see fig. 7). When the two countries demarcated their marine boundaries in 1958, Bahrain ceded its claims to an area of the gulf north of the island in return for a Saudi agreement to share the profits from any oil that might be discovered there. Subsequently, oil in commercial quantities was found in the seabed, and from 1968 to 1986, revenues from the Abu Safah field contributed significantly to Bahrain's overall oil income. Since production from the Abu Safah field ceased in early 1987, Saudi Arabia has provided Bahrain with 75,000 bpd of crude oil as compensation for this loss.

The second development was the more than tenfold increase in oil revenues that followed the December 1973 decision by the Organization of the Petroleum Exporting Countries (OPEC) to triple the international price of crude oil. During 1974 and 1975, income from oil accounted for an unprecedented 80 percent of government revenues, although this percentage gradually declined in subsequent years. Nevertheless, as long as oil prices remained high, oil revenues remained high. At the end of 1985, however, Saudi Arabia significantly increased its own oil production, which resulted in a glut of oil on international markets and caused prices to fall by more than 50 percent in just a few months. Bapco could not increase production from its declining oil fields beyond 42,000 bpd, and consequently Bahrain's oil revenues in 1986 were 65 percent less than in 1985. Oil revenues did not increase substantially until 1990, when the regional political crisis that accompanied Iraq's invasion of Kuwait precipitated a rise in oil prices. In 1991 oil revenues constituted about 62 percent of revenues in the government's budget (see table 14, Appendix).

Although Bahrain has had an oil-based economy since 1935, by 1993 proven reserves were estimated at 200 million barrels, and the government anticipated that all oil would be depleted by 2005. Nevertheless, the country's economists expected oil to remain important long beyond that date because of the large refinery Bapco has operated at Sitrah since 1937. Periodically expanded and modernized, the refinery has the capacity to process 250,000 bpd of crude oil, at least five times the amount produced by the island's oil wells (see table 15, Appendix). During 1992 the United States firm Bechtel Corporation began expanding the refinery's capacity to 360,000 bpd. More than 80 percent of the petroleum that the refinery processes comes via pipeline from Saudi Arabia. The Sitrah refinery has been refining Saudi crude oil since 1938 and expects to continue to do so well into the twenty-first century. Its refined petroleum products, most of which are exported, include aviation fuel, fuel oil, and gasoline.

Substantial deposits of natural gas are associated with Bahrain's oil fields. Before 1979, when the government established the Bahrain National Gas Company (Banagas), an estimated 3 million cubic meters per day of this gas were being vented to the atmosphere. Banagas opened a gas liquefaction plant that collected this gas and processed it into propane, butane, and naphtha. There are also large deposits of natural gas in the Khuff field, which is separate from the oil fields. Banagas has drilled more than fifteen wells to tap this gas, which is used for fuel to power the oil refinery, electric generators, and the water desalination plant. Some of the gas is reinjected into the oil fields to maintain reservoir pressure and stimulate production. In 1990 Banagas estimated total natural gas reserves at 209 trillion cubic meters; daily production averaged about 20 million cubic meters.

Data as of January 1993

BackgroundIn 1783, the al-Khalifa family captured Bahrain from the Persians. In order to secure these holdings, it entered into a series of treaties with the UK during the 19th century that made Bahrain a British protectorate. The archipelago attained its independence in 1971. Bahrain's small size and central location among Persian Gulf countries require it to play a delicate balancing act in foreign affairs among its larger neighbors. Facing declining oil reserves, Bahrain has turned to petroleum processing and refining and has transformed itself into an international banking center. King HAMAD bin Isa al-Khalifa, after coming to power in 1999, pushed economic and political reforms to improve relations with the Shia community. Shia political societies participated in 2006 parliamentary and municipal elections. Al Wifaq, the largest Shia political society, won the largest number of seats in the elected chamber of the legislature. However, Shia discontent has resurfaced in recent years with street demonstrations and occasional low-level violence.
LocationMiddle East, archipelago in the Persian Gulf, east of Saudi Arabia
Area(sq km)total: 741 sq km
land: 741 sq km
water: 0 sq km
Geographic coordinates26 00 N, 50 33 E
Land boundaries(km)0 km

Coastline(km)161 km

Climatearid; mild, pleasant winters; very hot, humid summers

Elevation extremes(m)lowest point: Persian Gulf 0 m
highest point: Jabal ad Dukhan 122 m
Natural resourcesoil, associated and nonassociated natural gas, fish, pearls
Land use(%)arable land: 2.82%
permanent crops: 5.63%
other: 91.55% (2005)

Irrigated land(sq km)40 sq km (2003)
Total renewable water resources(cu km)0.1 cu km (1997)
Freshwater withdrawal (domestic/industrial/agricultural)total: 0.3 cu km/yr (40%/3%/57%)
per capita: 411 cu m/yr (2000)
Natural hazardsperiodic droughts; dust storms
Environment - current issuesdesertification resulting from the degradation of limited arable land, periods of drought, and dust storms; coastal degradation (damage to coastlines, coral reefs, and sea vegetation) resulting from oil spills and other discharges from large tankers, oil refineries, and distribution stations; lack of freshwater resources (groundwater and seawater are the only sources for all water needs)
Environment - international agreementsparty to: Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Hazardous Wastes, Law of the Sea, Ozone Layer Protection, Wetlands
signed, but not ratified: none of the selected agreements
Geography - noteclose to primary Middle Eastern petroleum sources; strategic location in Persian Gulf, through which much of the Western world's petroleum must transit to reach open ocean
note: includes 235,108 non-nationals (July 2009 est.)
Age structure(%)0-14 years: 25.9% (male 95,224/female 93,241)
15-64 years: 70.2% (male 292,941/female 217,729)
65 years and over: 3.9% (male 15,106/female 13,544) (2009 est.)
Median age(years)total: 30.1 years
male: 33.2 years
female: 26.7 years (2009 est.)
Population growth rate(%)1.285% (2009 est.)
Birth rate(births/1,000 population)17.02 births/1,000 population (2009 est.)
Death rate(deaths/1,000 population)4.37 deaths/1,000 population (July 2009 est.)

Net migration rate(migrant(s)/1,000 population)0.2 migrant(s)/1,000 population (2009 est.)
Urbanization(%)urban population: 89% of total population (2008)
rate of urbanization: 1.8% annual rate of change (2005-10 est.)
Sex ratio(male(s)/female)at birth: 1.03 male(s)/female
under 15 years: 1.02 male(s)/female
15-64 years: 1.34 male(s)/female
65 years and over: 1.12 male(s)/female
total population: 1.24 male(s)/female (2009 est.)
Infant mortality rate(deaths/1,000 live births)total: 15.25 deaths/1,000 live births
male: 17.81 deaths/1,000 live births
female: 12.61 deaths/1,000 live births (2009 est.)

Life expectancy at birth(years)total population: 75.16 years
male: 72.64 years
female: 77.76 years (2009 est.)

Total fertility rate(children born/woman)2.5 children born/woman (2009 est.)
Nationalitynoun: Bahraini(s)
adjective: Bahraini
Ethnic groups(%)Bahraini 62.4%, non-Bahraini 37.6% (2001 census)

Religions(%)Muslim (Shia and Sunni) 81.2%, Christian 9%, other 9.8% (2001 census)
Languages(%)Arabic, English, Farsi, Urdu

Country nameconventional long form: Kingdom of Bahrain
conventional short form: Bahrain
local long form: Mamlakat al Bahrayn
local short form: Al Bahrayn
former: Dilmun
Government typeconstitutional monarchy
Capitalname: Manama
geographic coordinates: 26 14 N, 50 34 E
time difference: UTC+3 (8 hours ahead of Washington, DC during Standard Time)
Administrative divisions5 governorates; Asamah, Janubiyah, Muharraq, Shamaliyah, Wasat
note: each governorate administered by an appointed governor
Constitutionadopted 14 February 2002

Legal systembased on Islamic law and English common law; has not accepted compulsory ICJ jurisdiction

Suffrage20 years of age; universal
Executive branchchief of state: King HAMAD bin Isa Al-Khalifa (since 6 March 1999); Heir Apparent Crown Prince SALMAN bin Hamad Al-Khalifa (son of the monarch, born 21 October 1969)
head of government: Prime Minister KHALIFA bin Salman Al-Khalifa (since 1971); Deputy Prime Ministers ALI bin Khalifa bin Salman Al-Khalifa, MUHAMMAD bin Mubarak Al-Khalifa, Jawad al-ARAIDH
cabinet: Cabinet appointed by the monarch
elections: the monarchy is hereditary; prime minister appointed by the monarch

Legislative branchbicameral legislature consists of the Consultative Council (40 members appointed by the King) and the Council of Representatives or Chamber of Deputies (40 seats; members directly elected to serve four-year terms)
elections: Council of Representatives - last held November-December 2006 (next election to be held in 2010)
election results: Council of Representatives - percent of vote by society - NA; seats by society - al Wifaq (Shia) 17, al Asala (Sunni Salafi) 5, al Minbar (Sunni Muslim Brotherhood) 7, independents 11; note - seats by society as of February 2007 - al Wifaq 17, al Asala 8, al Minbar 7, al Mustaqbal (Moderate Sunni pro-government) 4, unassociated independents (all Sunni) 3, independent affiliated with al Wifaq (Sunni oppositionist) 1

Judicial branchHigh Civil Appeals Court

Political pressure groups and leadersShia activists; Sunni Islamist legislators
other: several small leftist and other groups are active
Flag descriptionred, the traditional color for flags of Persian Gulf states, with a white serrated band (five white points) on the hoist side; the five points represent the five pillars of Islam

Economy - overviewWith its highly developed communication and transport facilities, Bahrain is home to numerous multinational firms with business in the Gulf. Petroleum production and refining account for over 60% of Bahrain's export receipts, over 70% of government revenues, and 11% of GDP (exclusive of allied industries), underpinning Bahrain's strong economic growth in recent years. Aluminum is Bahrain's second major export after oil. Other major segments of Bahrain's economy are the financial and construction sectors. Bahrain is focused on Islamic banking and is competing on an international scale with Malaysia as a worldwide banking center. Bahrain is actively pursuing the diversification and privatization of its economy to reduce the country's dependence on oil. As part of this effort, in August 2006 Bahrain and the US implemented a Free Trade Agreement (FTA), the first FTA between the US and a Gulf state. Continued strong growth hinges on Bahrain's ability to acquire new natural gas supplies as feedstock to support its expanding petrochemical and aluminum industries. Unemployment, especially among the young, and the depletion of oil and underground water resources are long-term economic problems. The global financial crisis is likely to result in slower economic growth for Bahrain during 2009 as tight international credit and a slowing global economy cause funding for many non-oil projects to dry up. Lower oil prices may also cause Bahrain's budget to slip back into deficit.
GDP (purchasing power parity)$26.89 billion (2008 est.)
$25.29 billion (2007 est.)
$23.34 billion (2006 est.)
note: data are in 2008 US dollars
GDP (official exchange rate)$21.24 billion (2008 est.)
GDP - real growth rate(%)6.3% (2008 est.)
8.4% (2007 est.)
6.7% (2006 est.)
GDP - per capita (PPP)$37,400 (2008 est.)
$35,700 (2007 est.)
$33,400 (2006 est.)
note: data are in 2008 US dollars
GDP - composition by sector(%)agriculture: 0.4%
industry: 66.2%
services: 33.3% (2008 est.)
Labor force557,000
note: 44% of the population in the 15-64 age group is non-national (2008 est.)

Labor force - by occupation(%)agriculture: 1%
industry: 79%
services: 20% (1997 est.)
Unemployment rate(%)15% (2005 est.)
Population below poverty line(%)NA%
Household income or consumption by percentage share(%)lowest 10%: NA%
highest 10%: NA%
Investment (gross fixed)(% of GDP)26.6% of GDP (2008 est.)
Budgetrevenues: $6.934 billion
expenditures: $5.612 billion (2008 est.)
Inflation rate (consumer prices)(%)7% (2008 est.)
3.3% (2007 est.)

Stock of money$NA (31 December 2008)
$4.169 billion (31 December 2007)
Stock of quasi money$NA (31 December 2008)
$10.63 billion (31 December 2007)
Stock of domestic credit$NA (31 December 2008)
$10.32 billion (31 December 2007)
Market value of publicly traded shares$21.18 billion (31 December 2008)
$28.13 billion (31 December 2007)
$21.12 billion (31 December 2006)
Economic aid - recipient$103.9 million (2004)

Public debt(% of GDP)28.7% of GDP (2008 est.)
63.8% of GDP (2004 est.)
Agriculture - productsfruit, vegetables; poultry, dairy products; shrimp, fish
Industriespetroleum processing and refining, aluminum smelting, iron pelletization, fertilizers, Islamic and offshore banking, insurance, ship repairing, tourism

Industrial production growth rate(%)6.3% (2008 est.)

Current account balance$2.257 billion (2008 est.)
$2.907 billion (2007 est.)
Exports$17.49 billion (2008 est.)
$13.79 billion (2007 est.)

Exports - commodities(%)petroleum and petroleum products, aluminum, textiles
Exports - partners(%)Saudi Arabia 3.4%, India 2.7%, UAE 2.2% (2008)
Imports$14.25 billion (2008 est.)
$10.93 billion (2007 est.)

Imports - commodities(%)crude oil, machinery, chemicals
Imports - partners(%)Saudi Arabia 26.7%, Japan 8.9%, US 7.8%, China 6.2%, Germany 4.8%, South Korea 4.7%, UK 4.5% (2008)

Reserves of foreign exchange and gold$3.803 billion (31 December 2008 est.)
$4.101 billion (31 December 2007 est.)
Debt - external$10.33 billion (31 December 2008 est.)
$7.858 billion (31 December 2007 est.)

Stock of direct foreign investment - at home$15.01 billion (31 December 2008 est.)
$13.31 billion (31 December 2007 est.)
Stock of direct foreign investment - abroad$9.34 billion (31 December 2008 est.)
$7.72 billion (31 December 2007 est.)
Exchange ratesBahraini dinars (BHD) per US dollar - 0.376 (2008 est.), 0.376 (2007), 0.376 (2006), 0.376 (2005), 0.376 (2004)

Currency (code)Bahraini dinar (BHD)

Telephones - main lines in use220,000 (2008)
Telephones - mobile cellular1.4 million (2008)
Telephone systemgeneral assessment: modern system
domestic: modern fiber-optic integrated services; digital network with rapidly growing use of mobile-cellular telephones
international: country code - 973; landing point for the Fiber-Optic Link Around the Globe (FLAG) submarine cable network that provides links to Asia, Middle East, Europe, and US; tropospheric scatter to Qatar and UAE; microwave radio relay to Saudi Arabia; satellite earth station - 1 (2007)
Internet country code.bh
Internet users402,900 (2008)
Airports3 (2009)
Pipelines(km)gas 20 km; oil 32 km (2008)
Roadways(km)total: 3,498 km
paved: 2,768 km
unpaved: 730 km (2003)

Ports and terminalsMina' Salman, Sitrah
Military branchesBahrain Defense Forces (BDF): Ground Force (includes Air Defense), Naval Force, Air Force, National Guard
Military service age and obligation(years of age)17 years of age for voluntary military service; 15 years of age for NCOs, technicians, and cadets; no conscription (2008)
Manpower available for military servicemales age 16-49: 210,938
females age 16-49: 170,471 (2008 est.)
Manpower fit for military servicemales age 16-49: 171,004
females age 16-49: 144,555 (2009 est.)
Manpower reaching militarily significant age annuallymale: 6,612
female: 6,499 (2009 est.)
Military expenditures(% of GDP)4.5% of GDP (2006)
Disputes - internationalnone

Trafficking in personscurrent situation: Bahrain is a destination country for men and women trafficked for the purposes of involuntary servitude and commercial sexual exploitation; men and women from Africa, South Asia, and Southeast Asia migrate voluntarily to Bahrain to work as laborers or domestic servants where some face conditions of involuntary servitude such as unlawful withholding of passports, restrictions on movements, non-payment of wages, threats, and physical or sexual abuse; women from Thailand, Morocco, Eastern Europe, and Central Asia are trafficked to Bahrain for the purpose of commercial sexual exploitation
tier rating: Tier 2 Watch List - Bahrain is on the Tier 2 Watch List for failing to show evidence of increased efforts to combat human trafficking, particularly efforts that enforce laws against trafficking in persons, and that prevent the punishment of victims of trafficking; during 2007, Bahrain passed a comprehensive law prohibiting all forms of trafficking in persons; the government also established a specialized anti-trafficking unit within the Ministry of Interior to investigate trafficking crimes; however, the government did not report any prosecutions or convictions for trafficking offenses during 2007, despite reports of a substantial problem of involuntary servitude and sex trafficking (2008)
Electricity - production(kWh)10.25 billion kWh (2007 est.)
Electricity - production by source(%)fossil fuel: 100%
hydro: 0%
nuclear: 0%
other: 0% (2001)
Electricity - consumption(kWh)10.1 billion kWh (2007 est.)
Electricity - exports(kWh)0 kWh (2008 est.)
Electricity - imports(kWh)0 kWh (2008 est.)
Oil - production(bbl/day)48,520 bbl/day (2008 est.)
Oil - consumption(bbl/day)38,000 bbl/day (2008 est.)
Oil - exports(bbl/day)238,300 bbl/day (2007 est.)
Oil - imports(bbl/day)228,400 bbl/day (2007 est.)
Oil - proved reserves(bbl)124.6 million bbl (1 January 2009 est.)
Natural gas - production(cu m)12.64 billion cu m (2008 est.)
Natural gas - consumption(cu m)12.64 billion cu m (2008 est.)
Natural gas - exports(cu m)0 cu m (2008)
Natural gas - proved reserves(cu m)92.03 billion cu m (1 January 2009 est.)
HIV/AIDS - adult prevalence rate(%)0.2% (2001 est.)
HIV/AIDS - people living with HIV/AIDSfewer than 600 (2007 est.)
HIV/AIDS - deathsfewer than 200 (2003 est.)
Literacy(%)definition: age 15 and over can read and write
total population: 86.5%
male: 88.6%
female: 83.6% (2001 census)

School life expectancy (primary to tertiary education)(years)total: 15 years
male: 14 years
female: 16 years (2006)
Education expenditures(% of GDP)3.9% of GDP (1991)

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