The visit of King Abdullah Bin Abdul Aziz of Saudi Arabia to Bahrain culminates the extraordinary close ties between the two countries on numerous fields including the economic front. In fact, the visit is the first official visit by the Saudi monarch to Bahrain since assuming power in August 2005 following the death of King Fahd Bin Abdul Aziz.

To be sure, Saudi Arabia plays a uniquely significant role in Bahrain's economic viability and prospects. More specifically, Saudi Arabia contributes to Bahrain's economic fortune via the oil sector, investments in industrial projects and spending of Saudi visitors.

With regard to the oil field, Bahrain imports crude oil from Saudi Arabia via submarine pipelines dating back to several decades. The imported crude is then transferred to the sole refinery in Sitra, south of Manama, for refining into different petroleum products.

According to recent statistics released by Bahrain's National Oil and Gas Authority (Noga), imported crude from Saudi Arabia stood at 224,000 barrels per day in 2009. Hence, this accounted for a hefty 85 per cent of total crude transferred into the refinery, with the balance being local production from onshore sovereign Bahrain Field. The refinery's daily output amounted to 262,000 barrels in 2009, producing petroleum products such as diesel, jet fuel, and kerosene. It is probably fair to suggest that the refinery is too dependent on imported oil from neighbouring Saudi Arabia.

Production

In addition, Bahrain and Saudi Arabia share output produced from the offshore Abu Sa'afa field. Saudi Arabia controls the field, which boasted production of 300,000 per day in 2009. Noga statistics put Bahrain's total oil output at 182,000 barrels per day last year, divided between 32,000 barrels from Bahrain field and the balance from Abu Sa'afa. As such, Saudi-controlled Abu Sa'afa field accounted for 82 per cent of Bahrain's total oil last year.

Aside from the petroleum sector, Saudi public firms are major shareholders in key industrial undertakings in Bahrain. For instance, represented by Saudi Basic Industries Corporation (Sabic), Saudi Arabia together with Kuwait and Bahrain equally own the Gulf Petrochemicals Industries Company (GPIC). Also, the Saudi Public Investment Fund owns a 20 per cent stake of Aluminium Bahrain (Alba). Together Alba and GPIC are main sources of Bahrain's non-oil exports.

Still, Saudi visitors who cross into Bahrain from King Fahd causeway contribute to Bahrain's economic prospects via their spending power. On average, some 21,000 people use the causeway's two-way direction on a daily basis.

Yet, Saudi visitors account for more than three quarters of people using the causeway.

In reality, Bahrain's major shopping malls are located on road access from the causeway, clearly suggesting that Saudi subjects are top targets. It is believed that every riyal spent by Saudi visitors ends up into three riyals in Bahrain's economy via the multiplier effect phenomenon.

Liberal lifestyle

Saudi nationals admire visiting Bahrain to enjoy the liberal lifestyle amenities. Yet, others take advantage of the short distance to visit Bahrain in order to attend newly released movies. Opened in 1986, the King Fahd causeway runs for 25 kilometres, but the one-way travel takes about one hour due to lengthy customs control processes.

Clearly, Bahrain is the primary beneficiary of bilateral economic relationships in the fields of oil, investments in industrial undertakings and influx of Saudi citizens during the weekends.

Nevertheless, Bahrain is looking forward to fruits of King Abdullah's visit with regard to further strengthening economic ties between the two countries.

In particular, Bahrain is in need of fresh Saudi investments to help it address outstanding challenges, notably finding jobs for nationals.

 

Dr Jasim Ali is a Member of Parliament in Bahrain.