Two companies will invest $1.5 billion into development of the onshore Awali field.
Mubadala and Occidental sign oil recovery deal with Bahrain
Mubadala Development and the US oil firm Occidental Petroleum have signed an agreement with the Bahraini government to help boost production at the kingdom's main hydrocarbon reservoir. Together with the National Oil and Gas Authority of Bahrain, the two companies will invest $1.5 billion (Dh5.51bn) into development of the onshore Awali field to raise oil production to 100,000 barrels per day (bpd), from about 35,000 bpd.
Gas production will be increased above the existing 1.5 billion cubic feet a day. The Awali reservoir is the oldest oilfield development in the Gulf and Bahrain's key source of oil and gas. Occidental brought Mubadala into the Awali development after it won the contract in January to increase the field's production. The two companies have co-operated before to explore for oil and gas in Libya, Oman and Kazakhstan. The chairman of Occidental, Ray Irani, said the project was a natural extension of the company's portfolio across the region.
The Awali project is "consistent with our demonstrated corporate strength of employing improved and enhanced recovery techniques to maximise value from large, mature oil and gasfields," Mr Irani said. Mubadala and Occidental will form an operating company with the Bahrain government that will formulate a 25-year agreement to develop the field and take a share of ensuing oil production. A final agreement will be signed by the end of next month. The Awali contract is the California-based Occidental's second big win in the Gulf in the past year. Last Octover, it was awarded a concession to develop two small oilfields in Abu Dhabi.
With an initial production target of 20,000 bpd, the concession was the first granted to a foreign firm in three decades. For Mubadala, the agreement with Bahrain represents a substantial expansion of its investments in oil and gas. The company already has interests in Libya and Algeria, and has signed agreements to explore for oil and develop reservoirs in Oman and Kazakhstan. Mubadala also owns Peal Energy, a small oil producer in South-east Asia.
Khaldoon al Mubarak, the Mubadala chief executive, indicated that upstream oil and gas would remain a focus for the firm, which makes strategic investments on behalf of the Abu Dhabi Government. "This agreement is in line with our strategy of leveraging Abu Dhabi's history and experience to build a diverse range of energy-related businesses in the UAE and internationally," Mr al Mubarak said. An increase in output at Awali could not come too soon for Bahrain, which is in a desperate search for more energy supplies as production declines.