Oil and Gas Sector Receives Blow as Italian Company Set to Review Projects
2020-03-26 - 8:52 p
Bahrain Mirror (Exclusive): The global coronavirus epidemic, particularly ravaging in Europe, seems to have unexpected impacts. Bahrain received a heavy blow yesterday, with the Italian energy group ENI announcing that it will review its projects in the Middle East due to the Coronavirus pandemic and falling oil prices. It even said it would postpone projects that haven't been launched yet.
Eni's portfolio in the Middle East includes upstream and downstream projects in Bahrain, Lebanon, Oman and the United Arab Emirates.
In January 2019, the Government of Bahrain signed an exploration and participation agreement to invest in discovered oil and gas reserves in the Gulf of Bahrain field. The agreement came months after Bahrain announced in April 2018 the largest gas and oil discovery in its history, unveiling the Gulf of Bahrain field, which accounts for about 80 billion barrels of oil and about 20 trillion cubic feet of natural gas.
"We are at the moment reviewing all our ongoing projects for this year, 2020, and 2021," Fuad Krekshi, Eni's regional executive vice president, told a media conference call. "We expect to come out with the revised plan sometime in the next month."
"It's not just coronavirus here," he added. "You are talking about a market with a sudden drop of prices by 50 percent ... so we are looking at both sides, the price impact and the coronavirus."
Global oil prices have crashed due to a price war between Saudi Arabia and Russia following the collapse of a deal to curb output by more than 20 oil-producing countries.
Krekshi said it was too early to make judgments, but that officials were reviewing all options.
Krekshi said ENI would also postpone the start-up of new projects. "Where we haven't started yet, the operations will tend to be deferred until the situation clears."
Bahrain depends on the Italian company regarding this affair. Last February, Crown Prince and First Deputy Prime Minister visited Italy with a big delegation during which the Minister of Oil of the Kingdom of Bahrain and ENI's Chief Executive Officer signed an agreement to enhance collaboration in the energy sector, by facilitating the joint assessment and launch of new initiatives in areas of mutual interest, including renewable energy, LNG supply and exploration.
All oil and gas exploration projects are now halted, awaiting the Italian company's decision to withdraw, especially as the Italian economy suffered a huge blow due to the humanitarian tragedy that it has suffered from due to the Corona epidemic.