Downstream ambitions of Bahrain's Energy Minister

Finding fresh feedstock supplies is top of Bahrain minister's agenda

Finding fresh feedstock supplies is top of Bahrain, ANALYSIS, Industry Trends
Bahrain also plans to boost investment in refining sector and has conducted a study for a new refinery in the Kingdom to meet soaring domestic demand
Bahrain also plans to boost investment in refining sector and has conducted a study for a new refinery in the Kingdom to meet soaring domestic demand

Finding fresh feedstock supplies is top of Bahrain energy minister’s agenda

Amid booming downstream investments in the region, the Kingdom of Bahrain is taking dynamic decisions despite a comparative lack of domestic hydrocarbon reserves. This situation has made the mission of the energy minister of Bahrain, Dr Abdul Hussain bin Ali Mirza, challenging, as his priority is to meet soaring gas demand for power generation rather than the country’s downstream sector.

“Bahrain produces 100% of its power requirements from natural gas,” Dr Mirza, tells Refining and Petrochemicals Middle East.

Therefore, one of his primary tasks has been to increase gas exploration activities, in addition to think of alternative ways of securing enough gas feedstock. “We are pursuing this initiative with vigor by increasing domestic production on the onshore fields, and by drilling offshore. In parallel we are in the advanced stages of a project for the importation of LNG,” he adds.

“The activities of Tatweer Petroleum have led to an increase in gas production by 1.5% to just over 450 billion cubic feet per year during 2010-2011,” Dr Mirza adds. “Most of the incremental gas was supplied to the power generation sector to cater for increased demand for power in the Kingdom. We envisage that ultimately our production of gas will double within a decade,” he explains.

Much of the gas which Bahrain produces is associated gas, but it also searching for unconventional gas, which is still in the exploratory stage. “To date we have not yet identified any shale or other unconventional gas reserves.

Based on some previous work on the subject, we have developed some preliminary estimates for possible unconventional gas resources in the Bahrain field,” Dr Mirza notes. “These figures will be confirmed with the proposed three deep gas exploratory wells, where drilling is planned to start in 2013.”

While the country faces a gas shortage for power generation and petrochemical projects, Bahrain has enough crude oil to feed its existing refinery, as well supplying exports. “The Abu Saafa field is still producing 300 000 barrels per day. The Kingdom of Bahrain’s entitlement of 50% (or 150 000 barrels per day) is sold on the international market,” says Dr Mirza.

“What is significant however, is that our customer base has shifted from the past patterns, where Abu Safah was primarily sold to international majors and Japan. In the past few years we have seen and entered into contracts with some of the major refiners. This is due to the desirability of competitively priced crudes such as Abu Safah for the high conversion refineries coming up in Asia in general,” he reveals.

In addition to selling its crude abroad, Bahrain also processes part of it in its unique refinery, operated by Bahrain Petroleum Company (Bapco). “The Bapco refinery is old by world standards, some units being over 75 years old. The refinery evolved over the years and new units have been added, the most recent additions being the hydrocracker and the lube base oil plants in 2007 and 2010 respectively,” says Dr Mirza.

“In order to meet the more stringent product qualities demanded by the world markets and to meet the environmental regulations, it is necessary to replace most of the vintage units with plants incorporating the newest technologies and energy efficiency standards.”

Bahrain also plans to boost investment in refining, and has conducted a study to set up a new refinery in the Kingdom to meet soaring domestic demand for refined products.

“A study conducted in cooperation with an international company recommended a certain upgrading configuration. In order to get a better definition of the scope and of the cost estimate, the study was progressed to the process plant definition stages,” he says.

The minister reveals that the final investment decision will depend on ultimate refinery capacity and configuration.

“We expect the total investment cost of this refinery will be around US$6 billion to $8 billion dollars,” Dr Mirza reveals.

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“The new refinery will be able to meet the quality of the products demanded by the markets of the future, will meet the environmental standards and will be designed to world class energy efficiency standards,” he says.

Dr Mirza says that the size and configuration of the refinery have not yet been finalized. “Current thinking leans towards a refinery somewhere between 350 000 and 450 000 barrels per day. The ultimate decision will be obviously be dictated by economic returns,” he adds.

In addition to the plan to expand the refinery, Gulf Petrochemicals Industries Company (GPIC), the sole petrochemical producer in the country, also has plans to expand its current production output. GPIC intends to expand its ammonia and urea production capacities from the existing 400 000t/y and 610 000t/y to 1.2million t/y and 1.8million t/y respectively by 2017 subject to the final approval from the Government.

“The ammonia – urea project specification is awaiting final approval by GPIC’s shareholders and the blessings of the Bahrain Government,” Dr Mirza says.

The Minister of Energy is very proud of GPIC and its achievements so far, he reveals. “GPIC is one of the best petrochemical and fertilizer companies in the world and not just the region. We are very proud of it,” he says.

“GPIC’s strategy is to create a culture of continuous improvement, commitment and discipline. This positive culture has not only enabled GPIC to be competitive in the market place, but it has helped it break its own achievement records several times,” Dr Mirza adds.

Dr Mirza said that GPIC’s performance have shown excellent results on all levels in the last few years. “2011 was the best year for GPIC in its 26 year history in all aspects of its business activities, safety, efficiency, productivity, export and profitability.

Part of GPIC’s strategic planning 2020 includes the expansion project of a mega ammonia – urea plant.” In order to capture additional value along the entire hydrocarbon supply chain, Bapco have studied the merits of adding downstream units for both, olefins and aromatics production.

“Unfortunately, due to the relatively small plant that would have resulted as dictated by the current refinery size, the economics of such a venture were not attractive,” Dr Mirza concludes.

Historic achievement for the GPIC in 2012
Gulf Petrochemical Industries Company (GPIC) has recently exported its largest urea shipment in the company’s history.

The 50 000 metric tonnes of urea, was exported to Pakistan, which is one of the main importers of fertilizers. Average urea shipments loads for GPIC are between 30 000 and 40 000 metric tonne.

Abdulrahman Jawahery, general manager of GPIC said that such large shipments allow the company to boost position in the market as one of the major reliable supplier of urea, adding that market fundamentals have pushed prices higher.

GPIC exports 600 000 tonnes of urea annually, and targets mainly the USA, Australia, India and Pakistan.

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