Reuters reported that Middle Eastern consumers who have long enjoyed subsidized gas must come to terms with paying much more for the increasingly popular power generation fuel.

Bahrain Petroleum Company executive said that in what could prove a watershed in a region where industry has swelled on artificially low gas prices for years, Bahraini industry faces 75 cent price increase to USD 2.25 per million British thermal units from January 1st 2012 ordered by the government and to be collected by state run Bapco.

Analysts and western energy executives at the conference said that the subsidy trimming move, although small is a long overdue step towards reducing waste and encouraging investment in new discoveries to meet future needs in the region.

Mr Dawood Nassif head of strategy and business development at Bapco said that "The era of cheap gas prices in the Middle East is behind us. We need to move on to real market pricing."

Bahrain's gas production has struggled to keep up with buoyant demand for power generation and heavy industry, forcing the non OPEC minor oil producer to look further afield for its future gas needs.

Any gap between domestic and future import costs would have to be paid from government funds and Mr Mr Abdul Hussein bin Ali Mirza energy minister of Bahrain said that last week more subsidy cuts may be needed to narrow the gap between domestic and international prices.

Mr Nassif said that to meet future demand, which is rising rapidly across the Middle East, Bapco was in talks over several possible gas import pipeline projects and looking to sign short term LNG supply deals to compliment spot LNG purchases.

He said that we are looking still at pipeline gas. But LNG is your insurance policy. We are talking with a number of suppliers declining to give names but adding that the first deliveries were expected towards the end of 2014 or early 2015. Whatever makes business sense we will do it. It could be next door or it could be 5,000 miles away.

(Sourced from Reuters)