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03 March 2020

Bahrain considers stake sell in oil assets

A slump in crude prices since 2014 has prompted oil-rich Gulf states to take unprecedented steps to open up to foreign investors to diversify their sources of revenues

Bahrain has struggled since June 2014 when crude prices tumbled by more than half/Bloomberg

by Bloomberg

Bahrain may transfer some of its oil and natural gas assets into a proposed state-run fund in which it could sell shares to investors, as the Kingdom seeks to balance its budget.

Mohammed bin Khalifa Al Khalifa, the Bahrain Oil Minister, said that the government is working on the project and may decide to proceed with it later this year. The government is still deciding which assets to put into the proposed fund and how to value them, said Al Khalifa.

Saudi Arabia raised nearly $30 billion from the initial public offering of Saudi Aramco in December 2019, while Abu Dhabi National Oil Company is raising funds by bringing in partners for its refining unit and drilling business.

In December 2019, Oman oil minister said that the Sultanate is planning to list between 20 and 25 per cent of state-backed Oman Oil Company this year.

Bahrain, where oil and gas are also central to the economy, wants to balance its budget by 2022. The finance ministry said that Bahrain’s deficit ballooned to 13 per cent of GDP in 2015, though it has improved, narrowing in 2019 to 4.7 per cent of economic output from 6.3 per cent a year earlier.

The proposed fund and the sale of a stake in the oil company would serve as a channel for private investors to come in, which they have not really done in the oil and gas sector in Bahrain, said Al Khalifa.

Bahrain, the smallest economy among the six members bloc, has struggled since June 2014 when crude prices tumbled by more than half. Saudi Arabia, the UAE and Kuwait together pledged $10 billion in financial support for Bahrain in 2018.

The government is monitoring test wells for oil production at the Khaleej Al Bahrain shale oil and gas deposit discovered in 2018, while gas is in early development there, said Al Khalifa. The ministry plans to organise a roadshow later in 2020 to invite international oil companies to sign deals to produce at three new offshore gas blocks.

RELATED STORIES: Bahrain Khaleej Al Bahrain Saudi Aramco Oman Oil Company Abu Dhabi National Oil Company





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