Bahrain: Largest rock oil field discovered in country's history

Bahrain announced on Sunday the discovery of a large supply of light rock oil estimated to be much larger than the Bahrain field in addition to the discovery of large quantities of deep gas.(Shutterstock)
Updated 01 April 2018

Bahrain: Largest rock oil field discovered in country's history

LONDON: Bahrain has discovered the country’s biggest oilfield in decades, located off the west coast of the country.
The light shale oil and gas resource represents the largest discovery in the country since 1932, the BNA state news agency reported on Sunday. Further details on the find are expected to emerge on Wednesday at a press conference in Manama.
It could have a major impact on the country’s financial position which has come under scrutiny by ratings agencies in recent months.
Bahrain relies on the Abu Safa oilfield, which it shares with Saudi Arabia, for most of its oil.
“The new resource is forecast to contain highly significant quantities of tight oil and deep gas, understood to dwarf Bahrain’s current reserves,” said Crown Prince Salman bin Hamad Al-Khalifa, who chairs Bahrain’s Higher Committee for Natural Resources and Economic Security.
“Following the initial discovery of the resource, detailed analysis of the find’s content, size and extraction viability has been undertaken.”
Bahrain is working with petroleum industry consultants, DeGolyer and MacNaughton (Demac) to assess the finds.
“Today we announce that initial analysis demonstrates the find is at substantial levels, capable of supporting the long-term extraction of tight oil and deep gas,” the statement said.
Bahrain’s National Oil and Gas Authority (NOGA) is conducting modeling studies aimed at quantifying the size and value of the find.
A DeGolyer and MacNaughton spokesperson said: “Demac evaluated the reservoir and test data, evaluated volumetric and recovery potential, and provided reports documenting both prospective and contingent resources. 
“This is a project which breaks new ground for the industry.”
The discovery, which is expected to support extensive, long-term downstream investment, follows an uptick in oil and gas exploration in the Kingdom.
Last year the government accelerated exploration of sites to the west of Bahrain, which resulted in the discovery of the resource and oil being struck in the fourth quarter of 2017, it said.
Bahrain’s Ministry of Oil is due to reveal more details on the discovery this week, including initial findings of size and extraction viability.
Bahrain has been among the most exposed of the Gulf states to a sustained decline in global oil prices since mid-2014.
Its breakeven oil price, which is the oil price it needs in order to balance its budget, is higher than other Gulf crude exporters.
In November, Fitch Ratings revised Bahrain’s outlook to ‘negative’ from ‘stable,’ citing the challenges the government faced in tackling the deficit.
Moody’s said in September that Bahrain was among the “most exposed” to the ongoing diplomatic row between Doha and some of its Gulf neighbors.

Easy credit poses tough challenge for Russian economy minister

Updated 18 August 2019

Easy credit poses tough challenge for Russian economy minister

  • Measures being prepared to help indebted citizens; situation might blow up in 2021

MOSCOW: New machines popping up in Russian shopping centers seem innocuous enough — users insert their passport and receive a small loan in a matter of minutes.

But the devices, which dispense credit in Saint Petersburg malls at a sky-high annual rate of 365 percent, are another sign of a credit boom that has authorities worried.

Russians, who have seen their purchasing power decline in recent years, are borrowing more and more to buy goods or simply to make ends meet.

The level of loans has grown so much in the last 18 months that the economy minister warned it could contribute to another recession.

But it’s a sensitive topic. Limiting credit would deprive households of financing that is sometimes vital, and could hobble already stagnant growth.

The Russian economy was badly hit in 2014 by falling oil prices and Western sanctions over Moscow’s role in Ukraine, and it has yet to fully recover.

“Tightening lending conditions could immediately damage growth,” Natalia Orlova, chief economist at Alfa Bank, told AFP.

“Continuing retail loan growth is currently the main supporting factor,” she noted.

But “the situation could blow up in 2021,” Economy Minister Maxim Oreshkin warned in a recent interview with the Ekho Moskvy radio station.

He said measures were being prepared to help indebted Russians.

According to Oreshkin, consumer credit’s share of household debt increased by 25 percent last year and now represents 1.8 trillion rubles, around $27.5 billion.

For a third of indebted households, he said, credit reimbursement eats up 60 percent of their monthly income, pushing many to take out new loans to repay old ones.

Orlova said other countries in the region, for example in Eastern Europe, had even higher levels of overall consumer debt as a percentage of national output or GDP.

But Russian debt is “not spread equally, it is mainly held by lower income classes,” which are less likely to repay, she said.

The situation has led to friction between the government and the central bank, with ministers like Oreshkin criticizing it for not doing enough to restrict loans.

Meanwhile, economic growth slowed sharply early this year following recoveries in 2017 and 2018, with an increase of just 0.7 percent in the first half of 2019 from the same period a year earlier.

That was far from the 4.0 percent annual target set by President Vladimir Putin — a difficult objective while the country is subject to Western sanctions.

With 19 million people living below the poverty line, Russia is in dire need of development.

“The problem is that people don’t have money,” Andrei Kolesnikov of the Carnegie Center in Moscow wrote recently.

“This is why we can physically feel the trepidation of the financial and economic authorities,” he added. Kolesnikov described the government’s economic policy as something that “essentially boils down to collecting additional cash from the population and spending it on goals indicated by the state.”

At the beginning of his fourth presidential term in 2018, Putin unveiled ambitious “national projects.”

The cost of those projects — which fall into 12 categories that range from health to infrastructure — is estimated at $400 billion by 2024, of which $115 billion is to come from private investment.