A decree-law that could unlock a new phase of natural gas exploration in the kingdom’s historic oilfield is set to be debated in Parliament.
Legislators will discuss the Decree-Law No 33 of 2025 approving a concession agreement covering the Juba and pre-Tawil reservoirs in the Bahrain Field, signed on August 6 last year, between the government, Bapco Energies and EOG Resources Bahrain Awali.
Parliament’s financial and economic affairs committee, chaired by MP Ahmed Al Salloom, said the agreement represents ‘a carefully structured partnership where the State’s resources are developed without placing financial burdens on the public budget during the exploration phase’.
“This agreement is not a conventional concession,” Mr Al Salloom said.
“The exploration risk and costs are borne entirely by the foreign partner in the first phase – up to $100 million – while the kingdom retains strong fiscal rights through royalties, taxation, and ownership participation via Bapco Energies.”
According to the committee’s review, EOG will fully fund the initial exploration phase, including drilling four wells over roughly six months to assess commercial viability in unconventional onshore reservoirs that require advanced technology.
If commercially viable quantities of gas are confirmed, the agreement automatically moves to the next phase, with additional wells drilled and production beginning under a joint framework.
“The State does not pay for exploration, yet it benefits if success is achieved,” Mr Al Salloom noted. “This is a model that protects public funds while maximising the potential return from our natural resources.”
The committee highlighted that Bahrain secures a 10pc royalty on net profits in addition to oil resource taxation under long-standing Bahraini income tax laws dating back to 1979, collected by the National Bureau for Revenue.
“The taxation and stability clauses were examined in detail,” Mr Al Salloom said. “The concession holder is fully subject to Bahraini income tax, audit requirements, and reporting obligations, with copies of tax filings submitted to the ministry.”
A key element for MPs was the requirement for technology transfer, training and preference for Bahraini employment and suppliers.
The committee was told nine Bahrainis have already been sent to the United States for training, while joint teams have begun drilling and testing wells with an ‘outstanding safety record’ and no lost-time injuries so far.
“This is not just about gas,” Mr Al Salloom said. “It is about building local expertise in highly specialised unconventional reservoir technology that did not previously exist in Bahrain.”
The decree-law was originally issued under Article 38 of the Constitution due to the need to activate the agreement without delay, as exploration timelines begin immediately upon entry into force.
The Oil and Environment Ministry informed MPs that five wells have already been drilled in the gas caps reservoir to better assess resource quality, with initial results expected in the third quarter of this year.
Production from converted wells is already being sold locally.
“The technical indicators so far are reassuring, but further drilling is needed to confirm commercial scale,” Mr Al Salloom added.
The 34-article agreement includes provisions on environmental standards, corruption compliance, dispute resolution, local content preference, data confidentiality and even immediate cancellation if financial guarantees are not met.
The financial and economic affairs committee has unanimously recommended approval, describing the concession as a step towards enhancing Bahrain’s energy security, diversifying revenues and attracting advanced oil and gas investment to the kingdom.
mohammed@gdnmedia.bh
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