Interview: New Bahrain oil pipeline ready in 2018, gas pipeline under study

Samsung E&A Co

10/10/2017 11:49

* Possible pipeline could let Saudi use gas infrastructure 
    * Bahrain has been talking with Russia about gas imports 
    * Discussing possible aromatics plant with Kuwaiti firm 
    * No current plans to expand Abu Safa oilfield 
    * But aims to tap deep gas from Bahrain's own field 
 
    By Reem Shamseddine 
    MANAMA, Oct 10 (Reuters) - A new 350,000-barrels-per-day oil 
pipeline between Saudi Arabia and Bahrain will be completed next 
year to serve the planned expansion of Bahrain's refinery 
capacity, while construction of a gas pipeline is being 
considered, Bahrain's oil minister said. 
    Bahrain is in final negotiations with a preferred bidder to 
expand its only oil refinery and a contract is expected to be 
awarded before the year-end, Sheikh Mohammed bin Khalifa 
al-Khalifa said in an interview. 
    He did not identify the bidder, but sources told Reuters in 
August that a consortium including TechnipFMC, Samsung 
Engineering  028050.KS  and Spain's Tecnicas Reunidas  TRE.MC  
had submitted the lowest bid. 
    The kingdom is also building its first liquefied natural gas 
terminal, which will allow it to import LNG for domestic use. 
Saudi Aramco could potentially use the terminal as part of a 
wider scheme to connect Gulf Arab countries with a gas pipeline, 
Sheikh Mohammed said.  
    "With flexibility like that, Saudi Arabia, Kuwait and others 
will have access to LNG infrastructure in Bahrain, for example. 
The idea is to eventually have everybody linked up by gas. That 
is a concept under consideration," he said. 
    "But I think the interesting part is that if there was a 
line between us and Saudi, Aramco can start using the LNG 
terminal, the one we are building." 
    Saudi Arabia does not currently import gas, but its energy 
minister said last year that it might eventually do so to 
increase the use of gas in its energy mix. 
    "If Saudi Arabia opts to use the LNG project, the project 
could easily be expanded to allow larger LNG imports and a 
portion of the re-gasified fuel gas would flow by pipeline to 
Saudi," said Sadad al-Husseini, a Saudi energy analyst and 
former executive vice-president at Saudi Aramco. 
    Bahrain's gas terminal, expected to be completed in 2019, 
will have a capacity of 800 million standard cubic feet per day. 
Bahrain has not yet made a deal to buy gas, but the minister 
said his country had been talking with Russia. 
    The project is jointly owned by Bahrain's Oil and Gas 
Holding Co (Nogaholding) and a consortium of Teekay LNG 
Partners, Gulf Investment Corp and Samsung C&T. 
    Sheikh Mohammed said Bahrain was talking with Kuwait's 
Petrochemical Industries Co about the possibility of installing 
an aromatics plant with the refinery expansion. 
    Any plans to expand the Abu Safa oilfield, which Bahrain 
shares with Saudi Arabia, will depend on oil markets, but for 
the time being there are no such plans, he said. Bahrain now  
produces 200,000 bpd of oil including output from Abu Safa. 
    Instead, authorities are looking to increase output from 
Bahrain's own oilfield by tapping pre-khuff gas, which is gas 
located in deep deposits, Sheikh Mohammed said. 
    Bahrain also has long-term plans for offshore gas 
exploration. "We are open to it - we are waiting for the market 
to be right. Now there is a depressed market and you don't get 
the best deals ... so we are doing a lot of internal work to 
prepare." 
    Sheikh Mohammed said Bahrain, a small non-OPEC oil producer, 
would support any decision that the Organization of the 
Petroleum Exporting Countries took on production policy. He 
praised the current agreement on production restraint. 
    "I think the deal was positive - it has brought prices from 
the 40s to the 50s (dollars per barrel). What we see now is a 
reduction of inventories ... The unknown is how quickly shale 
adapts." 
 
 (Editing by Andrew Torchia and Dale Hudson) 
 ((Reem.Shamseddine@thomsonreuters.com; +966503335202; Reuters 
Messaging: reem.shamseddine.thomsonreuters.com@reuters.net)) 
 
Keywords: BAHRAIN REFINERY/