Bahrain Mirror (Exclusive): Despite the difference in the political and economic perspectives of most of those who commented on the new oil discovery in Bahrain, the majority completely agrees that there is a lack in technical information regarding the new field and its investment.
While popular reactions were calling for reversing the austerity policies initiated by the government to counter the deficit, a number of economists urged the government to proceed in tightening its grip and imposing taxes.
"This news is significant; however, there are large amounts of tight oil all over the world. The cost of its extraction exceeds that of its sale," said the prominent opposition figure Ebrahim Sharif, adding that "the question that the news doesn't answer is: Can we produce tight oil and deep gas in Bahrain with acceptable trade cost? We hope the answer is yes in both cases."
For his part, Al-Wefaq official, Ali Al-Aswad, said that such a discovery "is considered a very important shift as this country suffers from a lack of financial resources, accumulation of political crises, lack of transparency and monopoly of power, which makes us among the countries that live off of financial aids, causing us to lose independency in political decision-making. A look at the budget is sufficient for understanding this."
"If the announcement intended to really mean tight oil, the American companies that produce tight oil have stopped producing it since the oil price decreased to less than $60 because the production cost price is considered high with respect to the selling price. Occidental company left Bahrain a few years ago as a result of a lack of viable oil, what has changed?" he further stated.
However, the Bahrain Association of Banks chairman Adnan Yusuf said that a rapid improvement in Bahrain credit rating is expected to move from BB- to BB + (...) is expected, especially that oil exports and oil prices dramatically affect the credit rating of states.
Meanwhile, the economic analyst and former President of Bahrain Economists Society, Jaffar Al-Saegh, said that the discovery came at the right time due to what the Bahraini economy is currently witnessing. "We are in a dire need to increase exports, because we have been witnessing a continuous deficit since years, which led to an unprecedented increase in the public deficit."
He expressed his hope that "extracting oil would not cost a lot, since tight oil is extracted at high costs," adding that until now, "we don't know any details about it, but we hope that this is done at a low cost in order to double the profits and economic returns."
As for the oil exploration company, Al-Saegh said "the expected percentage for granting the franchising depends on the negotiation between the State and the company, and on the initial agreement between the two sides," pointing out that exploration companies as a whole take great percentages for carrying out the excavations, ranging between 20% and 30%. "This all depends on the strength of the company in negotiations processes with the state, and according to the articles of the signed agreement between both sides (...)," he added, hoping that the agreement would be in Bahrain's favor.
The economic analyst and Jafcon Consulting Chief Executive Officer Akbar Jafari revealed that there is no technical information until now on the huge oil discovery. The Bahraini Oil Minister announced that he will make a statement about all the technical, financial and economic information in a press conference soon.
Despite the expected financial revenues, Akbar stressed on the importance of proceeding in the policy of rationalizing the expenditures and taxes.