Banagas operates LPG plant facilities which recover propane, butane and naphtha from the Bahrain Oil Field's associated gas and refinery off-gas.

The company was founded in 1979 by Shaikh Isa bin Salman Al Khalifa with the objective of utilizing Bahrain's gas resources, by processing associated gas and refinery off-gas into marketable products.

The entire US$100 million project included the construction of four gas compressor stations, a processing plant to recover propane, butane and naphtha, and a storage area at Sitra.

In 1980 the first ship to transport gas was the Japanese tanker Yuyo Maru which was loaded with 5,000 tonnes of butane.

[2] In addition to exporting its products, Banagas uses residue gas as fuel for its own furnaces and gas turbines, while the rest is supplied to Aluminium Bahrain, Riffa Power Station, and the Bapco Refinery.