Bahrain Runs Out of Hydrocarbons and Goes Looking for Solar

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Green, Supply & Demand

You would think Bahrain in the Arabian Gulf would not have an energy problem, site of Oil Well Number One in 1931, the first oil strike in the Gulf. Bahrain is the original Arab oil state, yet it will also be the first to run out of oil. Declining production in the 1970’s spurred the government to diversify its economy, using gas once flared off as waste to fuel new industries such as aluminum refining and petrochemicals. The result today is that Bahrain has one of the most varied economies in the region, with a modest manufacturing base and decades-old factories and smelting plants. And there lies a large part of the problem; those industries rely on cheap power for their very existence. Set up in 1968 to produce some 56,000 metric tons a year of primary aluminum, Aluminium Bahrain Alba – can now produce up to 880,000 metric tons of aluminum a year, making its smelter the second largest in the Middle East after a similar facility in Dubai. The company employs more than 3,000 out of a total population of only 760,000 and contributes about 12% of gross domestic product. As important, it feeds a wider industry of rolling mills, cable manufacturers and foil manufacturers vital to a Bahraini economy with declining oil and gas revenues.

According to a Financial Times report, Bahrain’s natural gas reserves are in decline. Reserve estimates stand at about 84bn cu mtrs, with this figure expected to fall to 75bn by 2011, making the discovery of new resources or increased imports essential to keep Bahrain’s existing heavy industries afloat and ensure the lights stay on in Manama. The problem is both industry and the population have become used to cheap power and gasoline. If Bahrain were to divert oil and gas reserves to feed public needs, their industry would suffer and vice-versa. Of all the renewable options, only solar is practical in much of the Arabian Gulf. There is no hydro, wind is too weak and tidal activity is too low. But NCB Capital cites a study by Franz Trieb of the German Aerospace Centre quoted in another report, which states that Arabia’s large desert regions receive annually average solar energy equivalent to 1.5m barrels of oil per sq km. Nor are they short of large tracts of non arable land, estimated at 98.3% of the land mass by the same NCB report.

With plenty of otherwise valueless land, an average of 9 hours of sunshine a day, little seasonal variation and virtually no cloud cover, Bahrain sounds ideal for solar. But whether Bahrain will choose to use a comparatively expensive power source like photovoltaic or thermal solar, which could arguably be economic for domestic and light industrial use but has little prospect of being economic for aluminum smelters, to continue to produce primary aluminum remains to be seen. There is even talk of setting up an LNG import terminal following the failure to negotiate gas supplies from neighbors like Qatar who have announced a moratorium on any new gas deals. It would seem Bahrain is not alone in the Gulf region to fear the end of cheap natural resources. It doesn’t seem like long ago that the Middle East’s oil and gas reserves seemed limitless. All good things come to an end.

–Stuart Burns

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