Bahrain's declining oil reserves

Summary: A relatively prosperous and liberal state, Bahrain has one of the highest rates of energy consumption in the world. This has led the country to face new challenges in administering its declining oil and natural gas reserves, calling for a considerable restructuring of both sectors.

Located in the Persian Gulf, Bahrain has enjoyed a leading position within the Gulf Cooperation Council (a political and economic union that includes the United Arab Emirates, Oman, Saudi Arabia, Kuwait, and Qatar) in key sectors such as industry, finance, banking, and education. Although the country’s economy remains largely dependent on crude oil, Bahrain has started to diversify its economic structure to face the possibility of declining oil reserves. This has led to more investments in non-oil industries like financial services, aluminum manufacturing, and logistics, which together with the broader non-oil economy have expanded to make up roughly 85 percent of the nation’s gross domestic product, while the oil sector continues to generate two-thirds of government revenues. International organizations such as the World Bank and the World Economic Forum have given high rankings to the country, a fact that has helped attract foreign investments. In spite of the country’s reaching these positive goals and of the programs to introduce liberal reforms in the economy and politics at the beginning of the twenty-first century, Bahrain, together with Tunisia, Egypt, Libya, and Syria, was swept by demonstrations against political totalitarianism in the early months of 2011.

Bahrain has one of the highest rates of energy consumption in the world, with a per capita figure estimated at 514.3 million British thermal units (Btu) in 2022. This has led authorities to call for a more efficient use of energy to avoid a likely crisis that would endanger Bahrain’s economic competitiveness on the global stage. To continue to guarantee the necessary amounts of energy to industries and the other sectors of the Bahraini community, the Energy Conservation Committee (ECC) is trying to maximize the country’s energy efficiency as well as the implementation of renewable energy programs, particularly as far as wind power is concerned. Despite that, energy was primarily produced using fossil fuels in the 2020s. The ECC and the Bahraini government have made energy conservation a top priority. Bahrain’s Energy Transition Plan emphasizes efficiency, solar and other renewable generation, supply diversification, and decarbonization, with a national target for renewable sources to provide 20 percent of power by 2035.

For all its efforts to diversify its economy and make it less dependent on hydrocarbons, oil and gas still remain the key sources of government revenues. While the onshore Bahrain (or Awali) field is the country’s historic domestic extraction point, Bahrain relies on the offshore Abu Sa’afa field shared with Saudi Arabia for the majority of its oil revenues. Furthermore, the local pipeline network is fundamentally connected to Saudi Arabia via the pipeline system, which delivers the bulk of the crude oil processed at the Sitra refinery. As the reserves are progressively diminishing, the output of barrels was limited to roughly 35,000 per day, a radical reduction from the 75,000 barrels produced during the period of peak production in the 1970s from the onshore Awali field. Because the output from the this field has been more than halved since then, the country has become increasingly dependent on the supply of crude oil coming from the Abu Sa’afa field. Bahrain produced about 189,000 barrels per day of petroleum in 2023. According to information reported in Trading Economics, that number fell further, reaching roughly 188,000 barrels per day in 2025. However, by early 2026, regional maritime export disruptions through the Strait of Hormuz alongside scheduled facility maintenance triggered a sharp, temporary contraction in Bahrain’s total oil output. In addition, Bahrain imports crude oil from Saudi Arabia to supplement its own production, which is inferior to its refining capacity. Because the production has remained stable since the beginning of the twenty-first century, while the domestic demand has increased (as has the consumption of energy in petrochemical and aluminum production), the exports of refined petroleum products may decrease in future years. Bahrain exports its refined products mostly to India and other Asian countries.

The oil sector was controlled by the state-owned BapCo, or Bahrain Petroleum Company, which was in charge of all the different operations connected with this field, including production, refining, marketing, and distribution for the local and export markets, as well as exploration and the establishment of new wells. These two tasks were set to become particularly significant in the future, as the National Oil and Gas Authority (NOGA), which controlled BapCo and other companies operating in the hydrocarbon industry, has chosen to revitalize the Bahrain field with enhanced oil-recovery methods. However, NOGA was abolished in 2021, with its responsibilities divided among the Ministry of Oil and Environment, the Higher Committee for Energy and Natural Resources, and Bapco Energies. This new direction could improve the production of oil and natural gas, as they can allow most reserves to go beyond the primary or secondary extraction stage, which currently characterizes the operations. Compared to traditional methods, the enhanced oil recovery techniques enable extraction of 20 to 40 percent more oil.

Bahrain announced it had discovered one of the largest reserves in 2018, estimating an offshore tight shale resource of at least 80 billion barrels of oil in place. The government soon reached an agreement with Halliburton to drill wells to further evaluate the shale oil reserve, as well as a newly discovered offshore gas reserve.

Natural gas accounts for the majority of the country’s total energy consumption, and hydrocarbons also constitute the basis for Bahrain’s two major industries: refining and aluminum smelting. The country has limited gas reserves and, as it uses all the gas it produces, earlier projections raised concerns about future gas shortages, prompting Bahrain to expand exploration, efficiency, and supply planning. Bahrain announced new natural gas discoveries in two reservoirs in 2022, extending its production capacity.

The majority of Bahrain’s gas is used in its heavy industry, and the largest local consumer is Aluminum Bahrain (ALBA), one of the leading aluminum smelters in the world. About a third of gas consumption is employed to generate electricity and, in the process, to desalinate; about 10 percent is spent to keep pressure in the oil wells. Because the demand for gas is predicted to grow, the National Oil and Gas Authority has launched four offshore exploration blocks and has started a large-scale deep gas program. This has led to a 5 percent increase in the production of natural gas, a result that, however, will not keep up with rising demand.

To meet growing demand for natural gas used in power generation and industry, Bahrain historically explored gas imports from neighboring countries, including proposed pipeline supplies from Qatar and Iran. Bahrain later developed an import terminal and began receiving gas cargoes in 2025 from the United States; it also held talks that year with Russia over a possible multiyear gas supply agreement. The country has also entered into a partnership with the other Gulf Cooperation Council (GCC) countries to ensure a suitable electricity supply even in emergencies. To this end, Bahrain entered the GCC Interconnection Grid in 2009, linking its own grid with those of Saudi Arabia, Qatar, and Kuwait. In the same year, the generation of electric power totaled 11.2 terawatt-hours. The UAE followed in 2011 and Oman in 2014. The grid network has since entered a major expansion phase, initiating a 1.6-gigawatt direct interconnection to integrate Oman more deeply, alongside cross-border lines to supply electricity to Iraq. Linking the grids of the different GCC countries allows reductions in the cost of electricity generation.

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