Bahrain has natural gas reserves of about 3.25 trillion cubic feet (Tcf), much of it associated gas from the Awali oil field. The country produced 341 billion cubic feet (Bcf) of natural gas in 2003, all of which was consumed locally. Natural gas production and processing are the responsibility of Bapco Upstream. The largest domestic consumer was Aluminium Bahrain (Alba), which uses it in its power plant. In September 2003, the government signed an agreement with Alcoa allowing the American company to take up to a 26 percent equity stake in the company. Bapco Upstream awarded a contract in June 2004 to the U.S. engineering firm Foster Wheeler for upgrades to their main natural gas processing facility at Awali. Bahrains growing demand for electric power generation (see below) is likely to cause it to become a net natural gas importer in coming years. In January 2002, Qatar and Bahrain signed a Memorandum of Agreement indicating Bahrains intentions to purchase natural gas from Qatars North Field Enhanced Gas Utilization Project. After repeated delays, it now appears that it may be 2008 before Bahrain receives the 0.5 - 1 Bcf/d that it is seeking. Bahrain also opened negotiations with Iran on possible purchases of natural gas in early 2004. Bapco has also pursued investment in liquefied natural gas (LNG) projects. In 2002, the country set up a joint venture with the American firm Dynegy to invest in related opportunities in the Middle East and North Africa.
Electricity production and distribution in Bahrain is the responsibility of the Ministry of Electricity and Water. In 2003, Bahrain had an estimated electric generating capacity of 1.4 gigawatts (GW), and produced 7.3 billion kilowatt-hours (bkwh). Installed capacity is barely able to meet current consumption, with the countrys population growth and economic development leading to rapid power demand increases. Nevertheless, domestic power prices are expected to remain at the low level set by the government in 1992 in an attempt to help low-income groups. Like other Gulf states, Bahrain has made official appeals for voluntary conservation, but a widespread blackout in August 2004 underscored the need for additional capacity. At present, Bahrain gets its power from two combined water and power production complexes and three smaller electricity-only plants. The recent focus has been on the modern Hidd complex. Phase One, which was completed in 1999, added 280 megawatts (MW). Phase Two added another 600 MW when it was completed in 2004. In addition to the work being done at Hidd, the government awarded a contract in 2001 to Siemens Power Generation to extend the life of the Rifaa power plant.
In July 2004, Bahrain awarded its first contract for an independent power project (IPP) to the Belgian firm Tractebel. The first phase of the gas-fired Al-Ezzal Power Plant is scheduled to begin commercial operation in April 2006, with a capacity of 470 MW. The full capacity of 950 MW is to be completed by April 2007. Once the project is complete, roughly one-third of Bahrains generating capacity will be privately owned. In addition to trying to increase supply, the Bahraini government has continued its attempts to improve the nations transmission and distribution infrastructure. In November 2005, Bahrain awarded a contract for $343 million to the British firm Nexans for construction of a subsea interconnection between the Bahraini and Saudi electric grids. While movement is likely to be slow, Bahrain is considering the privatization of the countrys entire electricity sector.