Bahrain launches $1bn fund to invest in new shale reserves

The fund backed by initial seed capital from local investment banks will be open to regional and international investors

​H.E. Shaikh Mohammed bin Khalifa Al Khalifa, Minister of Oil, Bahrain. Photo by Phil Weymouth for The National.

Bahrain launched a $1 billion energy fund for institutional investors looking to develop its new discoveries of unconventional oil and gas off its western coast, the country’s oil minister said.

“For the first time, institutional investors will have the opportunity to gain access to energy assets,” Sheikh Mohamed bin Khalifa Al Khalifa said at an investment conference in Bahrain on Thursday.

The Bahrain Energy Fund, as it will be known, will seek to raise up to $1bn, with initial seed capital from the country’s oil and gas investor Nogaholding, as well as asset managers Osool and Sico Investment Bank. The fund will be open to investors in Bahrain, the GCC and internationally, according to a statement by the National Oil and Gas Authority (Noga).

In April Bahrain, the smallest oil producer in the Gulf, announced the discovery of 80 billion barrels of shale oil and up to 20 trillion cubic feet of tight gas offshore - its biggest find since oil was discovered in the kingdom over eight decades ago. The discovery dwarfs Bahrain’s current reserves.

The kingdom, which is set to commence appraisal of two wells this year with US energy contractor Halliburton, was expected to invest capital to coax oil and gas companies to develop its recent find. Bahrain’s break-even price of oil, one of the highest in the region, along with the geologically complex nature of its new reserves, would require the country to incentivise development.

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“These are exciting opportunities at an advanced stage of development, giving us the opportunity to deploy capital rapidly and generate returns for investors, while also accelerating the development of vital infrastructure projects in Bahrain,” said Sheikh Mohammed.

The energy fund would invest in a “range of energy projects” across the downstream, mid and upstream sectors in Bahrain, that would develop around the discovery of the new resources, according to Noga.

Some of the projects were said to be at an “advanced stage of development”, thus enabling a rapid deployment of capital, it said.

In an interview with The National last month, Dawood Nassif, a board member at the country's state-owned Bahrain Petroleum Company, said the country was "looking at all options" to finance exploration and production of its shale reserves.

“We might invite [international oil companies] or we might invest some,” he said in Abu Dhabi.

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