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Bahrain-DISCOVERY OF OIL





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Bahrain Index

At the end of World War I, the Arab states of the gulf were weak, with faltering economies and with local rulers who maintained their autonomy only with British assistance. The rulers controlled mainly the small port cities and some of the hinterland. The sultan in Oman claimed a somewhat larger area, but resistance to his rule made it difficult for him to exert his authority much beyond Muscat.

The discovery of oil in the region changed all this. Oil was first discovered in Iran, and by 1911 a British concern, the Anglo-Persian Oil Company (APOC), was producing oil in Iran. The British found oil in Iraq after World War I. In 1932 Standard Oil Company of California (Socal) discovered oil in commercial quantities in Bahrain. Socal then obtained a concession in Saudi Arabia in 1933 and discovered oil in commercial quantities in 1938.

A flurry of oil exploration activity occurred in the gulf in the 1930s with the United States and Britain competing with one another for oil concessions. One reason for the increased activity was that in 1932 the new Iranian government of Reza Shah Pahlavi revoked APOC's concession. Although the shah and the British later agreed on new terms, the threat of losing Iranian oil convinced the British in particular that they must find other sources. The small states of the Persian Gulf were a natural place to look. Geological conditions were similar to those in Iran, and, because of treaties signed between 1820 and 1920, the British had substantial influence and could restrict foreign access.

Oil exploration did not mean immediate wealth for Arab rulers of the area. Although the oil companies struck large deposits of oil in Bahrain almost immediately, it took longer in other countries to locate finds of commercial size. Oman, for instance, was unable to export oil until 1967. World War II delayed development of whatever fields had been discovered in the 1930s; so it was not until the 1950s that countries still technically dependent on Britain for their security began to earn large incomes. The oil fields in Kuwait were developed the fastest, and by 1953 that nation had become the largest oil producer in the gulf. Considerably smaller fields in Qatar came onstream in commercial quantities in the 1950s, and Abu Dhabi began to export offshore oil in 1962. Dubayy began to profit from offshore oil deposits in the late 1960s.

Until the 1970s, foreign companies owned and managed the gulf oil industry. In most cases, European- and United States-based concerns formed subsidiaries to work in specific countries, and these subsidiaries paid fees to the local rulers, first for the right to explore for oil and later for the right to export the oil. When the first arrangements were made, local rulers had a weak bargaining position because they had few other sources of income and were eager to get revenues from the oil companies as fast as possible. Moreover, in 1930 no one knew the size of gulf oil reserves.

As production increased and the extent of oil deposits became known, indigenous rulers improved their terms. In the 1950s, rulers routinely demanded an equal share of oil company profits in addition to a royalty fee. By the 1970s, most of the gulf countries, which by then were independent of British control, bought major shares in the subsidiary companies that worked within their borders. By the early 1990s, many of these subsidiaries had become completely state-owned concerns. They continued to employ Western experts at the highest decisionmaking levels, but the local government had ultimate responsibility and profits.

Data as of January 1993



BackgroundIn 1783, the al-Khalifa family captured Bahrain from the Persians. In order to secure these holdings, it entered into a series of treaties with the UK during the 19th century that made Bahrain a British protectorate. The archipelago attained its independence in 1971. Bahrain's small size and central location among Persian Gulf countries require it to play a delicate balancing act in foreign affairs among its larger neighbors. Facing declining oil reserves, Bahrain has turned to petroleum processing and refining and has transformed itself into an international banking center. King HAMAD bin Isa al-Khalifa, after coming to power in 1999, pushed economic and political reforms to improve relations with the Shia community. Shia political societies participated in 2006 parliamentary and municipal elections. Al Wifaq, the largest Shia political society, won the largest number of seats in the elected chamber of the legislature. However, Shia discontent has resurfaced in recent years with street demonstrations and occasional low-level violence.
LocationMiddle East, archipelago in the Persian Gulf, east of Saudi Arabia
Area(sq km)total: 741 sq km
land: 741 sq km
water: 0 sq km
Geographic coordinates26 00 N, 50 33 E
Land boundaries(km)0 km

Coastline(km)161 km

Climatearid; mild, pleasant winters; very hot, humid summers

Elevation extremes(m)lowest point: Persian Gulf 0 m
highest point: Jabal ad Dukhan 122 m
Natural resourcesoil, associated and nonassociated natural gas, fish, pearls
Land use(%)arable land: 2.82%
permanent crops: 5.63%
other: 91.55% (2005)

Irrigated land(sq km)40 sq km (2003)
Total renewable water resources(cu km)0.1 cu km (1997)
Freshwater withdrawal (domestic/industrial/agricultural)total: 0.3 cu km/yr (40%/3%/57%)
per capita: 411 cu m/yr (2000)
Natural hazardsperiodic droughts; dust storms
Environment - current issuesdesertification resulting from the degradation of limited arable land, periods of drought, and dust storms; coastal degradation (damage to coastlines, coral reefs, and sea vegetation) resulting from oil spills and other discharges from large tankers, oil refineries, and distribution stations; lack of freshwater resources (groundwater and seawater are the only sources for all water needs)
Environment - international agreementsparty to: Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Hazardous Wastes, Law of the Sea, Ozone Layer Protection, Wetlands
signed, but not ratified: none of the selected agreements
Geography - noteclose to primary Middle Eastern petroleum sources; strategic location in Persian Gulf, through which much of the Western world's petroleum must transit to reach open ocean
Population727,785
note: includes 235,108 non-nationals (July 2009 est.)
Age structure(%)0-14 years: 25.9% (male 95,224/female 93,241)
15-64 years: 70.2% (male 292,941/female 217,729)
65 years and over: 3.9% (male 15,106/female 13,544) (2009 est.)
Median age(years)total: 30.1 years
male: 33.2 years
female: 26.7 years (2009 est.)
Population growth rate(%)1.285% (2009 est.)
Birth rate(births/1,000 population)17.02 births/1,000 population (2009 est.)
Death rate(deaths/1,000 population)4.37 deaths/1,000 population (July 2009 est.)

Net migration rate(migrant(s)/1,000 population)0.2 migrant(s)/1,000 population (2009 est.)
Urbanization(%)urban population: 89% of total population (2008)
rate of urbanization: 1.8% annual rate of change (2005-10 est.)
Sex ratio(male(s)/female)at birth: 1.03 male(s)/female
under 15 years: 1.02 male(s)/female
15-64 years: 1.34 male(s)/female
65 years and over: 1.12 male(s)/female
total population: 1.24 male(s)/female (2009 est.)
Infant mortality rate(deaths/1,000 live births)total: 15.25 deaths/1,000 live births
male: 17.81 deaths/1,000 live births
female: 12.61 deaths/1,000 live births (2009 est.)

Life expectancy at birth(years)total population: 75.16 years
male: 72.64 years
female: 77.76 years (2009 est.)

Total fertility rate(children born/woman)2.5 children born/woman (2009 est.)
Nationalitynoun: Bahraini(s)
adjective: Bahraini
Ethnic groups(%)Bahraini 62.4%, non-Bahraini 37.6% (2001 census)

Religions(%)Muslim (Shia and Sunni) 81.2%, Christian 9%, other 9.8% (2001 census)
Languages(%)Arabic, English, Farsi, Urdu

Country nameconventional long form: Kingdom of Bahrain
conventional short form: Bahrain
local long form: Mamlakat al Bahrayn
local short form: Al Bahrayn
former: Dilmun
Government typeconstitutional monarchy
Capitalname: Manama
geographic coordinates: 26 14 N, 50 34 E
time difference: UTC+3 (8 hours ahead of Washington, DC during Standard Time)
Administrative divisions5 governorates; Asamah, Janubiyah, Muharraq, Shamaliyah, Wasat
note: each governorate administered by an appointed governor
Constitutionadopted 14 February 2002

Legal systembased on Islamic law and English common law; has not accepted compulsory ICJ jurisdiction

Suffrage20 years of age; universal
Executive branchchief of state: King HAMAD bin Isa Al-Khalifa (since 6 March 1999); Heir Apparent Crown Prince SALMAN bin Hamad Al-Khalifa (son of the monarch, born 21 October 1969)
head of government: Prime Minister KHALIFA bin Salman Al-Khalifa (since 1971); Deputy Prime Ministers ALI bin Khalifa bin Salman Al-Khalifa, MUHAMMAD bin Mubarak Al-Khalifa, Jawad al-ARAIDH
cabinet: Cabinet appointed by the monarch
elections: the monarchy is hereditary; prime minister appointed by the monarch

Legislative branchbicameral legislature consists of the Consultative Council (40 members appointed by the King) and the Council of Representatives or Chamber of Deputies (40 seats; members directly elected to serve four-year terms)
elections: Council of Representatives - last held November-December 2006 (next election to be held in 2010)
election results: Council of Representatives - percent of vote by society - NA; seats by society - al Wifaq (Shia) 17, al Asala (Sunni Salafi) 5, al Minbar (Sunni Muslim Brotherhood) 7, independents 11; note - seats by society as of February 2007 - al Wifaq 17, al Asala 8, al Minbar 7, al Mustaqbal (Moderate Sunni pro-government) 4, unassociated independents (all Sunni) 3, independent affiliated with al Wifaq (Sunni oppositionist) 1

Judicial branchHigh Civil Appeals Court

Political pressure groups and leadersShia activists; Sunni Islamist legislators
other: several small leftist and other groups are active
International organization participationABEDA, AFESD, AMF, FAO, G-77, GCC, IAEA, IBRD, ICAO, ICC, ICCt (signatory), ICRM, IDA, IDB, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM (observer), IPU, ISO, ITSO, ITU, ITUC, LAS, MIGA, NAM, OAPEC, OIC, OPCW, PCA, UN, UNCTAD, UNESCO, UNIDO, UNWTO, UPU, WCO, WFTU, WHO, WIPO, WMO, WTO
Flag descriptionred, the traditional color for flags of Persian Gulf states, with a white serrated band (five white points) on the hoist side; the five points represent the five pillars of Islam

Economy - overviewWith its highly developed communication and transport facilities, Bahrain is home to numerous multinational firms with business in the Gulf. Petroleum production and refining account for over 60% of Bahrain's export receipts, over 70% of government revenues, and 11% of GDP (exclusive of allied industries), underpinning Bahrain's strong economic growth in recent years. Aluminum is Bahrain's second major export after oil. Other major segments of Bahrain's economy are the financial and construction sectors. Bahrain is focused on Islamic banking and is competing on an international scale with Malaysia as a worldwide banking center. Bahrain is actively pursuing the diversification and privatization of its economy to reduce the country's dependence on oil. As part of this effort, in August 2006 Bahrain and the US implemented a Free Trade Agreement (FTA), the first FTA between the US and a Gulf state. Continued strong growth hinges on Bahrain's ability to acquire new natural gas supplies as feedstock to support its expanding petrochemical and aluminum industries. Unemployment, especially among the young, and the depletion of oil and underground water resources are long-term economic problems. The global financial crisis is likely to result in slower economic growth for Bahrain during 2009 as tight international credit and a slowing global economy cause funding for many non-oil projects to dry up. Lower oil prices may also cause Bahrain's budget to slip back into deficit.
GDP (purchasing power parity)$26.89 billion (2008 est.)
$25.29 billion (2007 est.)
$23.34 billion (2006 est.)
note: data are in 2008 US dollars
GDP (official exchange rate)$21.24 billion (2008 est.)
GDP - real growth rate(%)6.3% (2008 est.)
8.4% (2007 est.)
6.7% (2006 est.)
GDP - per capita (PPP)$37,400 (2008 est.)
$35,700 (2007 est.)
$33,400 (2006 est.)
note: data are in 2008 US dollars
GDP - composition by sector(%)agriculture: 0.4%
industry: 66.2%
services: 33.3% (2008 est.)
Labor force557,000
note: 44% of the population in the 15-64 age group is non-national (2008 est.)

Labor force - by occupation(%)agriculture: 1%
industry: 79%
services: 20% (1997 est.)
Unemployment rate(%)15% (2005 est.)
Population below poverty line(%)NA%
Household income or consumption by percentage share(%)lowest 10%: NA%
highest 10%: NA%
Investment (gross fixed)(% of GDP)26.6% of GDP (2008 est.)
Budgetrevenues: $6.934 billion
expenditures: $5.612 billion (2008 est.)
Inflation rate (consumer prices)(%)7% (2008 est.)
3.3% (2007 est.)

Stock of money$NA (31 December 2008)
$4.169 billion (31 December 2007)
Stock of quasi money$NA (31 December 2008)
$10.63 billion (31 December 2007)
Stock of domestic credit$NA (31 December 2008)
$10.32 billion (31 December 2007)
Market value of publicly traded shares$21.18 billion (31 December 2008)
$28.13 billion (31 December 2007)
$21.12 billion (31 December 2006)
Economic aid - recipient$103.9 million (2004)

Public debt(% of GDP)28.7% of GDP (2008 est.)
63.8% of GDP (2004 est.)
Agriculture - productsfruit, vegetables; poultry, dairy products; shrimp, fish
Industriespetroleum processing and refining, aluminum smelting, iron pelletization, fertilizers, Islamic and offshore banking, insurance, ship repairing, tourism

Industrial production growth rate(%)6.3% (2008 est.)

Current account balance$2.257 billion (2008 est.)
$2.907 billion (2007 est.)
Exports$17.49 billion (2008 est.)
$13.79 billion (2007 est.)

Exports - commodities(%)petroleum and petroleum products, aluminum, textiles
Exports - partners(%)Saudi Arabia 3.4%, India 2.7%, UAE 2.2% (2008)
Imports$14.25 billion (2008 est.)
$10.93 billion (2007 est.)

Imports - commodities(%)crude oil, machinery, chemicals
Imports - partners(%)Saudi Arabia 26.7%, Japan 8.9%, US 7.8%, China 6.2%, Germany 4.8%, South Korea 4.7%, UK 4.5% (2008)

Reserves of foreign exchange and gold$3.803 billion (31 December 2008 est.)
$4.101 billion (31 December 2007 est.)
Debt - external$10.33 billion (31 December 2008 est.)
$7.858 billion (31 December 2007 est.)

Stock of direct foreign investment - at home$15.01 billion (31 December 2008 est.)
$13.31 billion (31 December 2007 est.)
Stock of direct foreign investment - abroad$9.34 billion (31 December 2008 est.)
$7.72 billion (31 December 2007 est.)
Exchange ratesBahraini dinars (BHD) per US dollar - 0.376 (2008 est.), 0.376 (2007), 0.376 (2006), 0.376 (2005), 0.376 (2004)

Currency (code)Bahraini dinar (BHD)

Telephones - main lines in use220,000 (2008)
Telephones - mobile cellular1.4 million (2008)
Telephone systemgeneral assessment: modern system
domestic: modern fiber-optic integrated services; digital network with rapidly growing use of mobile-cellular telephones
international: country code - 973; landing point for the Fiber-Optic Link Around the Globe (FLAG) submarine cable network that provides links to Asia, Middle East, Europe, and US; tropospheric scatter to Qatar and UAE; microwave radio relay to Saudi Arabia; satellite earth station - 1 (2007)
Internet country code.bh
Internet users402,900 (2008)
Airports3 (2009)
Pipelines(km)gas 20 km; oil 32 km (2008)
Roadways(km)total: 3,498 km
paved: 2,768 km
unpaved: 730 km (2003)

Ports and terminalsMina' Salman, Sitrah
Military branchesBahrain Defense Forces (BDF): Ground Force (includes Air Defense), Naval Force, Air Force, National Guard
Military service age and obligation(years of age)17 years of age for voluntary military service; 15 years of age for NCOs, technicians, and cadets; no conscription (2008)
Manpower available for military servicemales age 16-49: 210,938
females age 16-49: 170,471 (2008 est.)
Manpower fit for military servicemales age 16-49: 171,004
females age 16-49: 144,555 (2009 est.)
Manpower reaching militarily significant age annuallymale: 6,612
female: 6,499 (2009 est.)
Military expenditures(% of GDP)4.5% of GDP (2006)
Disputes - internationalnone

Trafficking in personscurrent situation: Bahrain is a destination country for men and women trafficked for the purposes of involuntary servitude and commercial sexual exploitation; men and women from Africa, South Asia, and Southeast Asia migrate voluntarily to Bahrain to work as laborers or domestic servants where some face conditions of involuntary servitude such as unlawful withholding of passports, restrictions on movements, non-payment of wages, threats, and physical or sexual abuse; women from Thailand, Morocco, Eastern Europe, and Central Asia are trafficked to Bahrain for the purpose of commercial sexual exploitation
tier rating: Tier 2 Watch List - Bahrain is on the Tier 2 Watch List for failing to show evidence of increased efforts to combat human trafficking, particularly efforts that enforce laws against trafficking in persons, and that prevent the punishment of victims of trafficking; during 2007, Bahrain passed a comprehensive law prohibiting all forms of trafficking in persons; the government also established a specialized anti-trafficking unit within the Ministry of Interior to investigate trafficking crimes; however, the government did not report any prosecutions or convictions for trafficking offenses during 2007, despite reports of a substantial problem of involuntary servitude and sex trafficking (2008)
Electricity - production(kWh)10.25 billion kWh (2007 est.)
Electricity - production by source(%)fossil fuel: 100%
hydro: 0%
nuclear: 0%
other: 0% (2001)
Electricity - consumption(kWh)10.1 billion kWh (2007 est.)
Electricity - exports(kWh)0 kWh (2008 est.)
Electricity - imports(kWh)0 kWh (2008 est.)
Oil - production(bbl/day)48,520 bbl/day (2008 est.)
Oil - consumption(bbl/day)38,000 bbl/day (2008 est.)
Oil - exports(bbl/day)238,300 bbl/day (2007 est.)
Oil - imports(bbl/day)228,400 bbl/day (2007 est.)
Oil - proved reserves(bbl)124.6 million bbl (1 January 2009 est.)
Natural gas - production(cu m)12.64 billion cu m (2008 est.)
Natural gas - consumption(cu m)12.64 billion cu m (2008 est.)
Natural gas - exports(cu m)0 cu m (2008)
Natural gas - proved reserves(cu m)92.03 billion cu m (1 January 2009 est.)
HIV/AIDS - adult prevalence rate(%)0.2% (2001 est.)
HIV/AIDS - people living with HIV/AIDSfewer than 600 (2007 est.)
HIV/AIDS - deathsfewer than 200 (2003 est.)
Literacy(%)definition: age 15 and over can read and write
total population: 86.5%
male: 88.6%
female: 83.6% (2001 census)

School life expectancy (primary to tertiary education)(years)total: 15 years
male: 14 years
female: 16 years (2006)
Education expenditures(% of GDP)3.9% of GDP (1991)








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