In the years after the First World War, as global demand for oil increased rapidly, there was tough competition to discover new sources of oil. International companies competed over the rights to explore for oil in various locations across the Arab world. Indeed, several oil experts didn’t even consider the tiny islands of Bahrain to be worth bothering with in the search for oil.
However, through a combination of circumstances, it turned out to be the Bahrain Petroleum Company (Bapco) which became the first company in the Arabian Peninsula region to discover oil; despite Bapco only having been established in 1929.
Oil first spurted out one of these exploratory wells in Bahrain in October 1931 and by 2 June 1932, jets of oil were spurting out from the ground.
So although States like Saudi Arabia, Iraq and Kuwait in future decades became more important to the global oil market as major exporters of millions of barrels per day – Bahrain was the first State in the region to discover oil, export oil and refine oil.
The location where oil was discovered was Jabal Dukhan (the mountain of smoke), which is the highest point in Bahrain’s mostly flat landscape. When you visit Jabal Dukhan today, you will find the Oil Museum, which was opened in 1992. The museum features old drilling equipment, maps and information about the origins of the oil industry in Bahrain.
Bapco began exporting oil in 1934 and its first refinery – the first in the Arabian Gulf – was built in 1935. Today, Bapco is wholly owned by the Government of Bahrain and its refinery has a capacity of about 250,000 barrels per day. Bahrain oil production averages at around 40,000 barrels per day. Saudi Arabia provides most of the crude for refinery operation via pipeline and Bahrain also receives a large portion of the net output and revenues from Saudi Arabia’s Abu Saafa offshore oilfield. The Bahrain National Gas Company operates a gas liquefaction plant that exploits gas from Bahrain’s oilfields. Gas reserves can be expected to last about 50 years at present rates of consumption.
Bahrain’s modest oil supplies in relation to its neighbours gave rise to Bahrain’s success as the first state in the region to successfully manage its transition away from full dependence on oil. In particular, the expansion of the banking and tourism sectors in recent decades have given rise to a vibrant and competitive private sector, even during periods when oil revenues are depleted.
This unexpected discovery of oil in 1932 came at exactly the moment when Bahrain’s pearl economy was in a state of sudden collapse due to the global market being flooded with artificially-cultured Japanese pearls. Thus, almost overnight, Bahrain went from being a pearling economy to an oil economy.
The discovery of oil several years ahead of Bahrain’s Arabian neighbours put Bahrain on a rapid trajectory of development. In particular, this period saw the expansion of the public education system, improved healthcare, and the development of Bahrain’s public infrastructure.
First for Bahrain