OBG talks to Adel Khalil Al Moayyed, Chairman, BAPCO

Interview: Adel Khalil Al Moayyed

At what stage of development is the Sitra Refinery Master Plan, and how will upgrades to the Arabia-Bahrain (AB) pipeline affect refinery operations?

ADEL KHAIL AL MOAYYED: The Sitra Refinery Master Plan, or rather the BAPCO Modernisation Programme (BMP), is progressing well. The objective of the BMP is to develop an optimum refinery configuration that will place BAPCO amongst the most competitive refineries as well as address environmental and efficiency issues. The initial front-end loading phase for the BMP, corresponding to phase 1 of BAPCO’s project development and execution process – detailing the business case, scope, framework and viability – has been completed in line with recommendations of a number of specialised studies and reviews. The AB pipeline project is integrated with the BMP in that the new crude oil pipeline throughput design supports the refinery capacity enhancement planned by implementation of the BMP.

Which enhanced oil recovery (EOR) techniques have proven most successful for Tatweer?

AL MOAYYED: Tatweer has recently implemented several EOR pilots for the first time in Bahrain, such as steam and water injection. These were designed to evaluate the potential for extracting heavy and light residual oil from mature assets, hence their success will lead to expanding the application to other reservoirs in the field. It is key to evaluate these pilot projects and collect the right data to assess the economic and technical viability of EOR processes in the reservoirs. It is too early to specify projected production, but initial assessment of steam injection in the shallow heavy reservoir has shown a positive response and we are looking forward to seeing Tatweer’s options to expand the pilot flood area.

How has regional competition evolved in relation to the export of refined petroleum products?

AL MOAYYED: The overall market has been short of products, especially middle distillates. As such our sales performance has exceeded our targets over the last 12 months, especially for gasoil. On the other hand, kerosene has been relatively steady with marginal improvement in the premium levels. Naphtha had a high negative crack, which was contrary to past levels relative to Dubai crude, and that affected refinery margins. Fuel oil, being 4% sulphur, was also selling at a premium. Our lube sales have just started through our partner, Neste Oil, and we are looking forward to developing new sale markets and growing the demand for this product in the automotive lube base oil sector.

What is the status of the liquefied natural gas (LNG) import terminal, and when will it be operational?

AL MOAYYED: Directionally, it has been decided to pursue the import of LNG to meet the future needs of Bahrain. The team – National Oil and Gas Authority (NOGA), nogaholding and BAPCO – is currently carrying out a review of all processes before finalising the future direction with respect to the process and technology for handling gas import. This is a lengthy process as several technical, commercial and legal aspects must be analysed in absolute detail. The team expects to conclude the review in the first quarter of 2013, following which recommendations for strategic partnerships and alliances will be put up for approval. The terminal itself is expected to take 24 months to build from the time the development agreements are signed.

What are BAPCO’s focus areas going forward?

AL MOAYYED: Over the next six to eight years, our strategic focus for the downstream business will be entirely on the BMP. The BMP is in fact a “programme” which, in project management terms, is a group of related projects managed in a coordinated way to obtain maximum benefits. It is envisaged that the BMP will be split into several individual work packages or “projects” for better manageability, coordination and ease of integration with the existing refinery. The BMP is set to be the single-largest capital investment in the history of BAPCO as well as that of the Kingdom of Bahrain.