Bahrain Gets $2 Bn Japanese Financing For Refinery Upgrade & Alba Expansion.

The Industrial Bank of Japan is arranging a $2 bn financial package to fund the upgrading of the 250,000 b/d oil refinery of state-owned Bahrain Petroleum Co. (Bapco) and a 50% expansion of the Aluminium Bahrain (Alba) smelter. The refinery project will cost more than $1 bn.

The refinery upgrade will include a new 40,000 b/d high-conversion hydrocracker, based on technology to be provided by Chevron Lummus Global under a $12m contract signed on Nov. 21, 2000, for which Bechtel has just completed the front-end engineering and design (FEED) work. The EPC contract is to be awarded during the fourth quarter and the project should be completed by March 2004. This will enable the Sitra refinery to produce extra low sulphur diesel (ELSD), an OECD-grade fuel with a sulphur content of 50 parts per million (ppm). Now, Sitra is producing diesels with sulphur content ranging between 500 and 750 ppm (0.5-0.75% sulphur).

Kuwait is the biggest producer of ELSD in the Middle East (see Kuwait survey in Nos. 21-25 of the current Review volume). Bapco, which exports a major part of its products output, hopes to move ELSD to the EU market. But in the EU the premium for ELSD over heavier diesels has declined from $40/ton when this grade was imposed in the 1990s to about $15/ton. The EU is expected to impose a "zero sulphur", or Auto Oil II, from the beginning of 2005. This will have a sulphur content of up to 10 ppm.

(Bahrain produces about 37,000 b/d of crude oil from a single field, which is depleting, and gets more than 200,000 b/d of crudes from Saudi Arabia. Of the Saudi supply, Bapco gets about 120,000 b/d free of charge as this comes from the offshore Abu Safah field which is shared by the two GCC neighbours).

Alba's 500,000 t/y aluminium smelter is to be expanded to 750,000 t/y with the addition of a fifth pot line. The project is to be completed within 30 months of work. It will include a 630 MW power plant to drive the new pot line which will require 450-500 MW. This will make Alba's the largest aluminium smelter in the world. But Dubai's smelter Dubal may do the same if Alba's project proves to be profitable. A favourable feasibility study for the fifth pot line was completed in early November 2000 by Kaiser Engineering of the US, which says demand for Gulf aluminium east of Suez is to increase considerably in the coming years.