February 2, 2009 / 10:55 AM / 11 years ago

UPDATE 1-Bahrain, Shell agree to study gas supply, imports

(Adds details, comments from Bahrain oil minister)

MANAMA, Feb 2 (Reuters) - Bahrain and Royal Dutch Shell (RDSa.L) on Monday signed a memorandum of understanding (MoU) to study gas imports to meet the kingdom’s growing demand.

Bahrain, like its Gulf Arab neighbours, has seen a rapid increase in natural gas consumption as its economy has grown with a petrodollar-fuelled boom in the region. The kingdom is looking to boost both domestic supply and imports.

Under the MoU studies will be done on importing liquefied natural gas (LNG) as well as gas by pipeline, Bahrain’s National Oil and Gas Authority (NOGA) and Shell said in a joint statement.

Shell will also work on developing capacity at Bahrain Petroleum Co (Bapco) to make gas from crude oil and heavy residues.

Bahrain has held talks with Gulf neighbour Qatar and Iran about importing 1 billion cubic feet per day (cfd) of natural gas.

Bahrain’s Oil Minister Abdul-Hussain bin Ali Mirza told a news conference that negotiations with Iran where ongoing, but declined to provide details.

He told Reuters he was still optimistic the talks would conclude by the end of the year.

Qatar is the world’s largest exporter of LNG — gas chilled to liquid form for export by ship.

Other Gulf Arab states have turned to Qatar to meet their rapidly rising demand. State gas producer Qatargas and Shell have signed an agreement to supply LNG to Dubai from 2010.

Kuwait aims to begin importing gas from Qatar this summer, after years of struggling to meet peak power demand when temperatures soar in the desert.

Iraq may also export gas in the future. Shell signed a multi-billion dollar deal with Iraq in September to capture natural gas produced with oil that is burnt at oilfields, some of which could eventually be exported as LNG.

Martin Trachsel, vice president at Shell’s Gas & Power unit, said Shell was also studying supplying Bahrain with gas-to-liquid (GTL) products from its Pearl GTL project in Qatar, which is expected to start production late in 2010.

Bahrain consumed 1.3 billion cubic feet of gas per day in 2007 and expects consumption to rise to 2 billion cubic feet per day in about 10 years. (Reporting by Frederik Richter; editing by Karen Foster)

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