Bahrain yesterday signed a new oil exploration deal with a major Thai company.

It is hoped the contract will lead to the first commercial discovery of oil off the country's shores in 75 years.

Oil and Gas Affairs Minister Dr Abdulhussain Mirza signed an Exploration and Production Sharing Agreement with  PTTEP, under which the company will be drilling two wells in the Khuff formation.

Dr Mirza said the soaring cost of oil, which this year hit $100 per barrel, meant even a small or medium sized discovery made the project economically viable.

He is confident the project will be successful and pointed to PTTEP's track record in establishing international ventures in Iran, Algeria, Egypt and Oman.

He told the Gulf Daily News, our sister newspaper, that the government would not bear any drilling expenses from the scheme and said if oil was discovered Bahrain would split its production with the company.

PTTEP president Khun Mrigadat said the company was unlikely to start drilling until next year, when it has completed a geological study and seismic survey of the area, at a cost of $13 million. - TradeArabia News Service