Bahrain emerges as a top player in the refining industry

As the most powerful figure in Bahrain’s oil and gas sector, the Minister for Oil and Gas Affairs, Dr Abdul-Hussain Ali Mirza holds the key to one of the world’s most profitable refining industries. In this exclusive interview he tells Diana Milne about his hopes for the future.

“The main thing I have brought about is a paradigm shift in the oil and gas sector. There are lots of activities going on now in the sector.”
-Dr Abdul-Hussain Ali Mirza

When Dr Abdul-Hussain Ali Mirza started out as a fresh-faced Bapco trainee after leaving school, he never dreamt of one day becoming the most powerful figure in the country's oil and gas industry.  Today he is charged with overseeing the whole of Bahrain's energy remit, at a time when country is undertaking a dramatic overhaul of its oil and gas industry. Formerly a relative backwater in the GCC oil and gas sector, Bahrain is currently experiancing a flurry of activity by major international oil companies following the allocating of four offshore exploration and production blocks last year. Meanwhile, efforts are underway to tap into the country's natural gas reserves and to develop technology that will breath new life into the ageing Bahrain field.

Describing his spectacular climb to the top, the man in charge of these projects says: "I worked at Bapco for 40 years, starting off as a trainee before ending up as Chief Executive. During that period the company was kind enough to sponsor my higher education in London. Then I had to go through various positions, climbing up the ladder of the organisation. So I have been General Manager of Administration, General Manager of Services and of Finance and Legal Affairs, Deputy Chief Executive and Chief Executive. I was appointed in 2002 by his Majesty the King as a Minister of State and in 2004 I was made Minister of Cabinet affairs."

Leading change

Ali Mirza became Minister of Oil and Gas Affairs in 2005. Then, following the issuing of political, social and economic reforms by the King of Bahrain, the National Oil and Gas Authority was formed, with Ali Mirza as Chairman. Since his appointment, he has been instrumental in encouraging investment by IOCs in Bahrain's oil sector - an achievement he describes as his proudest to date: "The main thing I have brought about is a paradigm shift in the oil and gas sector. There are lots of activities going on now in the sector. We have offered all our offshore blocks for exploration to the international oil companies and they are working on it now. Cooperation with international oil and gas companies based in other countries is seen by the political leadership of Bahrain, and the National Oil and Gas Authority (NOGA), to be vital to the future of the industry in Bahrain. International oil companies are the enablers for us to develop our natural resources such that the citizens of Bahrain can collectively benefit in terms of standards of living, employment and well-being."

In addition to the major upstream projects underway at Bahrain's four offshore blocks by IOC's the country is also awaiting the completion of a major overhaul of the main pipeline, which transports crude oil from Saudi Arabia to Bahrain's refineries.  This will enable Bahrain to achieve one of its key objectives - a plan to pour billions of dollars into the production of high quality gasoline and aviation fuels. "With respect to the new pipeline, the FEED study is ready to start while we await approvals for the onshore route of the pipeline. This project is part of our vision to create a refinery that is a world leader and extremely competitive," says Ali Mirza.

Maximising resources

As well as creating new facilities, Bahrain is investing heavily in maximising its existing resources, in particular the Bahrain field - the oldest in the Arabian Gulf at 79 years. Oil was first discovered there in 1952, signalling Bahrain's entry into the global oil and gas market. The NOGA has signed an agreement with two international oil companies, Occidental and Mubadala, which, together with the newly formed Bahraini oil company Tatweer, will aim to triple current production at the Bahrain field from 33,000 barrels per day to 1200,000 in the next seven years. "They will be using the latest enhanced oil recovery technologies such as steam injections, water flooding and gas injections. Tatweer will develop the onshore oil field with the latest technology such that the production of crude oil is doubled, from the current 30-35 thousand barrels per day within five years and then trebled two years after that.  In addition, Tatweer will implement a drilling programme to increase the non-associated gas production so that the planned increases in power and water requirement are met. Now one might ask how important is this to Bahrain, my answer is that the contribution to the national economy will be enormous," says Ali Mirza.

Another activity upon which high hopes are being pinned in terms of its potential contribution to the Bahraini economy is the exploration of Bahrain's deep gas reserves. Currently the government is evaluating bids by IOCs to carry out the work. To date drilling has reached 16,000 feet in Bahrain but the plan is to increase this to 20,000 feet. Ali Mirza hopes that if greater reserves are accessed in Bahrain it will, like neighbouring Qatar, be able to tap into growing world demand for LNG: "Our consultants say we have a good quantity (of  deep gas), this is their estimate.  We don't want to project any figures because the bidders have bid, and we want to look at their projections and their evaluations first. Gas is the most valuable commodity now everywhere.  It's required for generating energy for the industry, for generating power and electricity, for use as a fuel in the petrochemical industry, so it is a commodity in demand, and we in Bahrain have launched 12 initiatives to secure gas because we don't have as much gas as Qatar has currently." 

The effective use of new technology, including enhanced oil recovery techniques, is vital to the success of Bahrain's many projects, and Ali Mirza says the country prides itself on its investment in the latest techniques: "Of course Bahrain has always been proactive in the use of new technology and we are currently using it both in the exploration for crude oil and in the refining sector. So for example, we have spent more than US$1 billion over the last 10 years to modernise a refinery by using new technology. We have carried out major projects, for example, to produce unleaded gasoline and low sulphur diesel projects, and we are currently commissioning a new refinery gas exploration project. All these projects require new technology." 

Investing in the future

As well as investing heavily in exploration technology, Bahrain has also paid millions of dollars into projects to increase the sustainability of its operations. Last year the NOGA signed an agreement with Abu Dhabi- based Masdar to develop ways to cut carbon emissions in the oil and gas sector.  Describing some of the environmental projects the government has been involved in to date, he says: "We are very proud of what has been achieved, and the support that we have received for environmental projects from the very top of the government. For example, over 10 years ago Bapco developed an environmental investment programme to improve the quality of petroleum products and reduce environmental emissions.  Unfortunately these projects cannot be achieved over night.  In the early part of the decade Bapco eliminated the manufacture of leaded gasoline and the whole country went unleaded.  More recently the refinery invested US$150 million to remove impurities from the Khuff gas and the project has reduced the SOx emissions to a level below the standard for refineries in California.  This is a clear example of how the refinery sets world-class standards. We also invested US$700 million in the refinery to manufacture ultra low sulphur diesel, and the refinery now makes the cleanest diesel in the world.  Further refinery projects have addressed solid waste from the refinery and improvement of the excess water."

But these cutting edge projects require major investment by the Bahraini government at a time when margins in the industry are tighter than ever. Ali Mirza admits the Bahraini oil and gas industry has been adversely affected by the economic downturn, but says, given the lengthy planning periods involved in constructing new refinery facilities, he is hopeful that long-term projects will not be affected: "The global recession has impacted the worldwide demand for petroleum product and the corollary of this is a reduction in refinery margins.  Hence, the recession has definitely reduced our earnings.  On the other hand, investments in this industry take a long time to develop from the initial idea to a plant in operation.  This can often take between five and seven years.  Our strategic investment plans are designed to position us for the long term and so we have not reduced this investment.  Short-term investment has been modified but not to a great extent."

As well as the financial capital needed to realise its ambitious plans, Bahrain requires skilled human capital, which, like in every other country's oil industry, could be in short supply as the current generation of oil and gas workers approaches retirement age. Ali Mirza describes the steps being taken to combat the problem: "If I may take you back to the 1960s, Bahrain faced the problem of developing a skilled workforce in the oil and gas industry and a cadre of young men and women were identified for further education.  That programme was coordinated by Bapco in conjunction with the American company Caltex and the result was that the major Bahraini companies are now predominately managed and operated by Bahrainis. It is not uncommon for our manufacturing companies to have a level of Bahrainisation of between 80 and 90 percent. The additional benefit was that many national leaders, myself included, originated in that programme.

"However, what are we doing for the future?  Today is a different world and the young people of today have different aspirations. However, we aim to recreate the successful development programmes of the past to ensure that the necessary academic and vocational education and training is made available to every young person in Bahrain."

He goes on to reveal that the government is in the process of discussing plans for an oil and gas institution in the country to educate trainees and that it is focussing on the continued training of those already employed within the industry: "We want to create an institute for education in the oil and gas industry, and we have been discussing an arrangement with a prestigious, globally recognised university that specialises in courses suited to the oil and gas industry.   Furthermore, we ensure that the training and development budgets of companies within the NOGA portfolio are generously supported such that employees of all ages are getting the necessary development as this is vital to the future.  It is a great challenge for NOGA to demonstrate to the school leavers and the university graduates that a career in the oil industry will be rewarding financially and in terms of job satisfaction."

Ali Mirza's own career success story should be motivation enough for aspiring young Bahraini oil workers to join the industry, despite the challenges it currently faces in today's economic climate.  He believes that Bahrain's own part in the global oil story is only just beginning and that there is plenty of life left in the industry yet: "If anyone tells you that the oil industry is a dying industry, just take another look at the demand for hydrocarbons, the dependence of society today on the products from oil, and the reserves for the future.  Oil will be a part of the energy solution for a very long time."