Despite the impact of the recent unrest on the financial and hospitality sectors, the hydrocarbon sector in Bahrain has been resilient, a report said.

Oil and gas production accounts for 13 per cent of Bahrain's economy, but this figure fails to fully capture the role of hydrocarbons, according to a report by Standard Chartered bank.

'First, improved gas supply will facilitate the expansion of other industries that rely on gas as an energy source and downstream petrochemicals and manufacturing will benefit as well,' the report states.

'Second, higher production and prices will boost oil revenues in the short to medium term.

'Although the oil sector is not the biggest driver of Bahrain's GDP growth, it is the main source of government income, accounting for around 83 per cent of total revenues and 65 per cent of export receipts.

'The government aims to improve oil exploration methods, allowing foreign companies to sign production-sharing agreements with its national oil company for the first time.

'Bahrain is targeting an increase in oil production in the Awali field from the current 32,000 barrels per day to 75,000 by 2015 and 112,000 by 2020 using enhanced oil recovery techniques,' says the report.

'The country's natural gas capacity is also expected to expand from 500 million to two billion cubic feet per day, drilling ever further at depths of up to 20,000 feet on its onshore field.

'Continued support can be expected from Saudi Arabia, which provides the majority of the crude that Bahrain refines,' the report adds.

'The growth in gas production is absolutely crucial for Bahrain if it wants to satisfy its rising domestic consumption, notably if it is to meet its ambitious downstream developments, which are essentially based on the principle of a cheap domestically produced feedstock.

'The results of enhanced production capacity are already being felt. For the first time in a dozen years, oil and gas production is likely to increase in 2011, with the trend having started in the final quarter of last year.

'The rise in output should reach around 4.5 per cent this year, just enough to cushion the adverse effects on other sectors of the economy,' the report adds.-TradeArabia News Service