BAHRAIN is set to launch a licencing round for its deep onshore gas zones, a top government official says.

A number of international oil firms have been invited to attend the official launch of the tender in the Bahraini capital, Oil Minister Dr Abdul-Hussain bin Ali Mirza says.
Whoever wins the tender will be looking for gas in the pre-Khuff formation of the Bahrain field, at depths of between 15,000 and 20,000 feet, Dr Mirza says. Current production at the field, also known as Awali, comes from reservoirs that lie above 15,000 feet.
“Recent successes in neighboring states, where a commercial deep gas play has been proven, imply significant potential within the pre-Khuff formation within Bahrain,” says an invitation sent to oil companies by Bahrain’s National Oil and Gas Authority (Noga).
According to another government official, any future production from the pre-Khuff zones will be used to meet domestic demand. He says the government does not have an estimate of how much gas those deep zones may hold. Bahraini officials have yet to decide how to price any gas, and will work on this once the tender has been launched.
Dr Mirza also reveals that Bahrain has signed a framework agreement to import gas from Iran.
The deal follows five rounds of meetings since an initial agreement was inked in November 2007. “It lays out the framework within which further negotiations will take place. Iran agrees to provide Bahrain with 1 billion cubic feet of gas a day, and the suggested source is the South Pars field,” Dr Mirza says.
The two countries will now negotiate commercial terms, such as gas pricing and the investment needed to transport the gas to Bahrain, before signing a final agreement, he says.
Also supermajor ExxonMobil, Denmark’s Maersk and US producer Occidental were expected to submit final bids to partner with the government to boost oil production from the Bahrain field, Dr Mirza says.
The three companies were short-listed earlier this year to help raise output at the 33,000 barrel per day field. The winning company will set up a joint venture with a Noga subsidiary, to be majority owned by the government. The foreign company will bear all the investment costs.
In September 2008, Dr Mirza said the winning company would be announced in the first half of 2009.
The foreign firm is expected to bring much-needed new technology and expertise to help swell output at the mature field, which was discovered in 1932. It would introduce water flooding, horizontal drilling and gas injection, in addition to enhanced oil recovery.
The sides will split any incremental production increase above the volumes envisaged in Bahrain Petroleum Co’s current development plans, which are based mainly on traditional extraction methods.
If all goes to plan, Bahrain will be able to import around 28 million cubic metre per day of Iranian gas and in return will invest in the development projects of phases 15 and 16 of Iran’s giant offshore South Pars gas field.