As global demand for oil rapidly increased during the early twentieth century, there was tough competition to discover new sources of oil. International companies competed over the rights to search for oil in various locations across the Middle East. Indeed, several oil experts didn’t even consider the tiny islands of Bahrain to be worth bothering with in the search for oil.

Nevertheless, it ended up being 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.

It seemed as though God was smiling on Bahrain. Oil was discovered at almost exactly the same moment that Bahrain’s pearling industry suddenly collapsed as a result of the sudden availability of cultured Japanese pearls. Within a couple of years, many of those who had been part of boat crews hunting for pearls would be forming the workforce of Bahrain’s emerging oil industry. And while pearling had brought the islands of Bahrain substantial prosperity, the discovery of oil offered wealth of an entirely greater magnitude.

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. For many years Bahrain was the transport hub for the region, leading the way in aviation.

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 other heavy industry includes Aluminum Bahrain, which operates the largest aluminum smelter in the world with an annual production of about 525,000 metric tonnes. 

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.

Although in recent decades the emphasis has been on diversification away from economic dependence on oil; in 2018 the discovery of huge new Bahraini oil reserves was announced, promising important future revenues for the benefit of citizens.

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