Streamlining Oil and Gas
In a bid to consolidate its oil and natural gas industry, Bahrain has announced the establishment of a single company to co-ordinate the kingdom’s energy.
On August 1, Abdul Hussain bin Ali Mirza, minister for oil and gas affairs, announced that an agreement had been signed to set up the Holding Company for Oil and Gas (HCOG). With an established capital of $2.6bn, the new company will fall under the remit of the National Oil and Gas Authority (NOGA), of which Mirza is also chairman.
Under the agreement with Bahrain’s various state oil and gas companies, HCOG will control the government’s stakes in the country’s main energy firms and undertake investments in the sector on behalf of NOGA. It will also be empowered to establish new companies and have or acquire stakes in projects within Bahrain or globally.
The companies covered within HCOG’s holdings include the entirely state-owned Bahrain Petroleum Company (BAPCO) and Bahrain Gas Company Expansion as well as Bahrain Aviation Fuelling Company (BAFCO) (60%), Gulf Petrochemical Industries (33.3%) and the Bahrain National Gas Company (BANAGAS) (75%). The actual recorded value of the state-owned stakes in each of these companies will also be transferred to HCOG.
The decision to streamline the kingdom’s energy industry is in line with plans approved by the cabinet on July 29 and is in part due to efforts to meet the needs of the private sector, said Mirza.
HCOG will “open a new era in attracting greater investments into the kingdom’s oil and gas sectors,” said the minister.
Mirza said HCOG would be responsible for signing contracts with individuals, companies and organisations in the energy industry. Though initially based in Manama, the company may branch out and establish offices abroad, he said.
The greatest advantage that HCOG will bring to the oil and gas sector will be the reduction of the number of companies and agencies foreign investors, clients and service providers will have to deal with. The move is also expected to cut administrative costs, speed up the decision-making process and help provide more of a one-stop shop.
The founding of the holding company is part of a broader government programme to reform and consolidate the kingdom’s economic operations.
The decision to set up HCOG comes at a time of unprecedented international interest in Bahrain’s energy sector. On July 31, Mirza announced that 25 foreign firms had expressed interest in conducting exploration work in the waters off the kingdom’s coast.
Earlier this year, the government opened up four new offshore blocks for initial exploration, with September 19 as the final deadline for bids to be lodged.
While no precise date has been given for HCOG to start operations, the minister said NOGA has already created all of the necessary regulatory measures and a team of executives is in place. All that remains is for a royal decree to be issued for the company to be launched, said Mirza.
Though one of the early leaders in the Gulf region’s oil industry, with production starting more than 70 years ago, it has been long eclipsed by its larger and more resource rich neighbours. Industry experts estimate that the current reserves stand at 125m barrels of oil and 92bn cu metres of gas.
OBG – Bahrain Volume 115 – 10 Aug, ’07