x Abu Dhabi, UAEFriday 19 January 2018

Bapco speeds up work on oil refinery

Bahrain's oil company is accelerating plans to upgrade its refinery, just two months ago the site of strikes by workers, to show the country can spend billions of dollars from a GCC fund "wisely", says a company official.

Bahrain Petroleum (Bapco), the state oil company, is speeding up work on a refinery ahead of an expected cash injection for the kingdom from a GCC fund.

In March, the four wealthier Gulf nations put together a US$20 billion (Dh73.45bn) fund to funnel money to Oman and Bahrain.

Although no money has specifically been set aside for oil projects, Bapcohas cited the expected influx as a reason to accelerate an overhaul of the country's only refinery, with external risk evaluations and financing scheduled to begin next month.

"The board has instructed us to develop and implement the project faster," said Essa al Ansari, the general manager for major engineering projects at Bapco.

"If they offer you all these billions, [you have to] show that you have a way to spend it wisely … you've got to demonstrate that."

The GCC fund was widely interpreted as an attempt to quell social unrest, some of which occurred in the kingdom.

Bahrain relies on Saudi Arabia to supply the oil that it refines and exports.

Bapco suffered losses of US$15.9 million (Dh58.4m) in the first quarter of this year.

Dr Abdulhussain bin Ali Mirza, the Bahraini oil minister and the chairman of Bapco, said the company had sacked 293 employees for protesting against the government and going on strike.

The move came after a parliamentary investigation into absenteeism among Bapco employees that ended last week.

Bapco's refinery in the eastern town of Sitra had been a focal point for striking staff. At the height of protests in March, the facility was reportedly operating at a tenth of its total capacity of 267,000 barrels per day (bpd). The company has since returned production to pre-protest levels.

The planned refinery upgrades are intended to improve energy efficiency, curb emissions and expand capacity to between 350,000 and 450,000 bpd, said Mr al Ansari.

Bapco has brought in two international firms to conduct a risk analysis and due diligence, and is expected to call in a third company to evaluate potential sources of financing such as export-import agencies and fresh bank loans.

The unrest in Bahrain will not hamper Bapco in its attempts to secure funding from foreign lenders or technology from international oil companies, said Mr al Ansari.

"We are not looking for partners," he said on the sidelines of a petrochemicals conference in Abu Dhabi. "This is our refinery. If there is any risk, we take it. The recent unrest has nothing to do with it at all."

Mr al Ansari said he expected the external evaluations to be completed within six months and a construction contract to be awarded in 2014.

An expansion in refining capacity would hinge on plans for an estimated $350m pipeline to replace an existing pipeline that is more than a half century old.

The new pipeline is expected to deliver more crude and bypass population centres.