Mubadala Development and the US oil firm Occidental Petroleum have signed an agreement with the Bahraini government to help boost production at the kingdom's main hydrocarbon reservoir.
Together with the National Oil and Gas Authority of Bahrain, the two companies will invest $1.5 billion (Dh5.51bn) into development of the onshore Awali field to raise oil production to 100,000 barrels per day (bpd), from about 35,000 bpd.
Gas production will be increased above the existing 1.5 billion cubic feet a day. The Awali reservoir is the oldest oilfield development in the Gulf and Bahrain's key source of oil and gas. Occidental brought Mubadala into the Awali development after it won the contract in January to increase the field's production.
The two companies have co-operated before to explore for oil and gas in Libya, Oman and Kazakhstan. The chairman of Occidental, Ray Irani, said the project was a natural extension of the company's portfolio across the region.
The Awali project is "consistent with our demonstrated corporate strength of employing improved and enhanced recovery techniques to maximise value from large, mature oil and gasfields," Mr Irani said.
Mubadala and Occidental will form an operating company with the Bahrain government that will formulate a 25-year agreement to develop the field and take a share of ensuing oil production. A final agreement will be signed by the end of next month. The Awali contract is the California-based Occidental's second big win in the Gulf in the past year. Last Octover, it was awarded a concession to develop two small oilfields in Abu Dhabi.
With an initial production target of 20,000 bpd, the concession was the first granted to a foreign firm in three decades. For Mubadala, the agreement with Bahrain represents a substantial expansion of its investments in oil and gas.
The company already has interests in Libya and Algeria, and has signed agreements to explore for oil and develop reservoirs in Oman and Kazakhstan. Mubadala also owns Peal Energy, a small oil producer in South-east Asia.
Khaldoon al Mubarak, the Mubadala chief executive, indicated that upstream oil and gas would remain a focus for the firm, which makes strategic investments on behalf of the Abu Dhabi Government.
"This agreement is in line with our strategy of leveraging Abu Dhabi's history and experience to build a diverse range of energy-related businesses in the UAE and internationally," Mr al Mubarak said.
An increase in output at Awali could not come too soon for Bahrain, which is in a desperate search for more energy supplies as production declines.
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How to invest in gold
Investors can tap into the gold price by purchasing physical jewellery, coins and even gold bars, but these need to be stored safely and possibly insured.
A cheaper and more straightforward way to benefit from gold price growth is to buy an exchange-traded fund (ETF).
Most advisers suggest sticking to “physical” ETFs. These hold actual gold bullion, bars and coins in a vault on investors’ behalf. Others do not hold gold but use derivatives to track the price instead, adding an extra layer of risk. The two biggest physical gold ETFs are SPDR Gold Trust and iShares Gold Trust.
Another way to invest in gold’s success is to buy gold mining stocks, but Mr Gravier says this brings added risks and can be more volatile. “They have a serious downside potential should the price consolidate.”
Mr Kyprianou says gold and gold miners are two different asset classes. “One is a commodity and the other is a company stock, which means they behave differently.”
Mining companies are a business, susceptible to other market forces, such as worker availability, health and safety, strikes, debt levels, and so on. “These have nothing to do with gold at all. It means that some companies will survive, others won’t.”
By contrast, when gold is mined, it just sits in a vault. “It doesn’t even rust, which means it retains its value,” Mr Kyprianou says.
You may already have exposure to gold miners in your portfolio, say, through an international ETF or actively managed mutual fund.
You could spread this risk with an actively managed fund that invests in a spread of gold miners, with the best known being BlackRock Gold & General. It is up an incredible 55 per cent over the past year, and 240 per cent over five years. As always, past performance is no guide to the future.
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