Bahrain's Bapco sees oil trading opportunities as it expands refinery

Samsung E&A Co

10/03/2019 09:25

By Dahlia Nehme
    DUBAI, March 10 (Reuters) - Bahrain plans to commission its
expanded oil refinery by early 2023, allowing it to sell and
trade more petroleum products in the Gulf region and Asia, the
chief executive of state-owned oil company Bapco said. 
    The expansion will boost the capacity of its Sitra oil
refinery to 360,000 barrels per day (bpd) from the current
267,000 bpd, Bapco CEO Pete Bartlett told Reuters.
    Bapco currently receives 220,000-230,000 bpd of crude from
state oil company Saudi Aramco and will import the same volume
during the refinery's expansion, with commissioning scheduled
for late 2022 or early 2023, Bartlett said.
    In October 2018 Aramco and Bapco announced the commissioning
of the AB-4, a new phase of the Saudi-Bahrain crude oil
pipeline, capable of transporting up to 350,000 bpd, which would
serve Bahrain's planned refinery expansion.  urn:newsml:reuters.com:*:nD5N1TT01J
    "We are on track," Bartlett said of the expansion.
    The small non-OPEC Gulf oil producer, with around 124.6
million barrels of proven reserves, gets its oil revenue from
two fields: the onshore Bahrain field, and the offshore Abu
Safah field, which is shared with Saudi Arabia. The Bahrain
field produces around 50,000 bpd.
    Bahrain and top oil exporter Saudi Arabia split revenues
from the 300,000-bpd Abu Safah field, where production is
overseen by Aramco. 
    "Aramco and Bapco are strong partners and so our purchases
of feedstock are unaffected by what OPEC is doing in terms of
managing its own sales," Bartlett said when asked whether Saudi
exports to Bahrain would be affected by OPEC-led supply cuts. 
    The refinery expansion and resulting production increase may
prompt Bapco to focus more on spot trading, but the company is
unlikely to establish its own trading joint venture like other
national oil companies in the Middle East, Bartlett said. 
    "We will buy more feedstock and will be trading more
products," Bartlett said, adding the company would continue to
look also at trading spot cargoes.
    "We will be looking to develop off-take arrangements and
sale arrangements further but our core markets will remain
within the greater GCC (Gulf region) and increasingly we will
find ourselves competing for opportunities in Asia." 
    Around 88 percent of the crude that Bapco refines comes from
neighbouring Saudi Arabia, and the rest from Bahrain’s field.
    The refinery's expansion project financing – which is over
$4 billion in size – will be finalised in March, Bartlett said. 
    "We have been actively working with a number of export
credit agencies and commercial banks ... We’re on the cusp of
concluding the financing arrangements."
    Bapco had awarded contracts for the project to a consortium
comprising TechnipFMC  FTI.N , Samsung Engineering  028050.KS 
and Tecnicas Reunidas  TRE.MC . 
    Bahrain announced last year its largest ever oil discovery,
off the coast, estimated to have at least 80 billion barrels of
tight oil, and deep gas resources in the region of 10-20 billion
cubic feet.
    It is talking to U.S. oil companies with shale oil expertise
about developing those resources and hopes to have an interested
company by the end of the year, the country's oil minister told
Reuters last month.

 (Reporting by Dahlia Nehme; Editing by Rania El Gamal and Dale
Hudson)