Will Financial Pressures Prompt Bahrain to Sell its Share in Gas Port?

2020-06-11 - 7:53 am

Bahrain Mirror (Exclusive): The Coronavirus pandemic consequences and oil price collapse have increased financial pressures on the Government of Bahrain, which prompted it to borrow three times this year.

Bahrain has resorted to a variety of domestic and foreign debt instruments with a total value of about $4 billion, and has reduced public spending by about 30%.

Bahrain and Oman, two small oil producers compared to the other four Gulf States, were hurt by declining oil revenues.

The Omani government has sold some of its assets to counter financial pressures, including its share in the Oman Electricity Company.

According to information, Bahrain may follow Oman's footsteps in liquifying some of its assets.

An Emirati source said that Bahrain may partly sell assets in the oil sector to get liquidity to cope with the crisis.

Bahrain is banking on being able to tap into the international debt markets for short-term capital.

"At the same time, it [Bahrain] might look to follow the Oman model and sell-off some of its state assets, at least in part, beginning with stakes in pipelines or plants, and then looking at more upstream assets as the oil price continues to recover," a legal source in Abu Dhabi told OilPrice.com.


"The government may well look to sell a share in its LNG [liquefied natural gas] facility that was completed earlier this year," it underlined.

The Bahrain LNG import terminal is located offshore approximately four kilometers east of the onshore receiving facility at the Khalifa Bin Salman Port, with an initial capacity of 800 million standard cubic feet per day.

The terminal consists of a floating storage unit, a harbor and a sea barrier, an adjacent liquefied gas fumigation platform to return to its gas state, underwater pipes to transport gas from the platform to the shore, a land gas delivery facility and a land-based nitrogen production facility.

Bahrain LNG is jointly owned by the Bahraini National Oil and Gas Authority, Canadian Teekay LNG Partners, Kuwaiti Gulf Investment Corporation (GIC) and Korean Samsung Construction and Trading.

The project, 30% of which is owned by Bahrain, cost about $670 million.

Bahrain has not yet revealed its intention to give up its share in the port, but Bahrain's Oil Minister Mohammed bin Khalifa Al Khalifa pointed out that the government is ready to sell some oil assets.

The minister noted earlier this year that Bahrain may transfer some of its oil and natural gas assets to a proposed government fund where it could sell shares to investors.

He revealed that the Government was working on the project and it was decided to move forward later this year. The Government was in the process of determining which assets would be placed in the proposed fund and how to evaluate them.

"There is nothing unsellable," Al Khalifa said after Saudi Arabia sold a share in the national oil company Aramco last year. 

Arabic Version