A Sustainable Natural Gas Pricing Policy for the Kingdom of Bahrain

Abstract

Abstract : Ensuring a sustainable and economically viable natural gas pricing policy presents a critical challenge for the Kingdom of Bahrain, particularly given declining domestic production and increasing reliance on liquefied natural gas (LNG) imports. Although natural gas has historically supported Bahrain's economic growth, the current pricing structure is no longer sustainable, necessitating urgent reform. However, research on the long-term impact of natural gas pricing reforms on Bahrain's energy security, economic stability, and industrial competitiveness remains limited. The main objective of this study is to develop a sustainable natural gas pricing policy that balances economic feasibility, energy security, and industrial competitiveness while limiting fiscal pressure on the government. The study evaluates various pricing models and policy reforms, selecting the most appropriate approach based on economic analysis and stakeholder considerations The study employed macroeconomic simulations and scenario analysis to evaluate pricing policy implications under varying conditions. In addition, structured interviews were conducted with key stakeholders in the energy sector, particularly those involved in the natural gas market. These interviews provided critical insights into the potential impacts associated with the reform proposals. The findings indicate that while pricing reform will have economic consequences, the proposed hybrid model minimizes disruptions while ensuring long-term fiscal sustainability. The results highlight that without reform, Bahrain's reliance on imported LNG will lead to severe financial burdens, threatening energy security and industrial growth. The study also underscores the necessity of diversifying energy revenue streams, improving energy efficiency, and integrating renewable energy to mitigate economic risks. These findings carry significant policy implications for Bahrain's energy and fiscal planning. A well-structured gas pricing reform, coupled with strategic investments in alternative energy and efficiency improvements, will enhance Bahrain's economic resilience. This study provides a strategic framework for policymakers to implement a phased and balanced transition toward a more sustainable economy Keywords: Bahrain Natural Gas Market, Economic Sustainability, Energy Security, LNG Importation, Natural Gas Pricing, Policy Reform, Regulatory Framework, Renewable Energy