Bahrain Petroleum Company (Bapco) is considering a multi-billion-dollar investment to increase its refinery capacity by more than 100,000 barrels a day (b/d) to 350,000 b/d.

It is part of a series of projects in its masterplan, which will also result in the state-owned company replacing some of its fuel oil output in favour of greater production of higher-value products.

“One of the projects we have in mind as part of our masterplan for the modernisation and expansion of the refinery is upgrading,” says Abdulkarim al-Sayed, chief executive officer of Bapco. “About 15 per cent of the refinery’s output is fuel oil and because of the high differential between that and high-value products such as diesel, we want to reduce fuel-oil production and convert it to other products.”

At the same time, Al-Sayed says Bapco is aiming to replace the ageing crude units at the refinery with two more modern ones. “[We want to] capture the opportunity to replace them and enhance capacity,” he says. “Our aim really is to increase it to 350,000 b/d. In the current high-price environment, we are looking at an investment of $2-3bn.”

Only about 20 per cent of the refinery’s existing crude capacity is supplied by Bahrain’s own production, with the vast majority supplied through a 44-kilometre pipeline from Saudi Arabia. As a result, if the refinery’s capacity is increased, the pipeline will also have to be replaced.

“We are working with Saudi Aramco because the current pipeline does not have capacity,” says Al-Sayed. “One project we are looking at is to replace the pipeline with a larger capacity one and to reroute it away from residential areas. When the existing pipeline was laid in 1945, there were no residents at all along the route and now there are some houses alongside it.”

The two kingdoms are working together on the design of the pipeline. According to Al-Sayed, there is a tacit agreement that Riyadh will supply the additional crude, although, as is the case today, Manama will have to pay for the oil at the market rate.

Bapco is also developing plans to build a new gasoline plant to meet growing demand. “At present, gasoline only constitutes 8 per cent of total products,” says Al-Sayed.

“Demand is increasing locally by 6 per cent, so we need to increase production, which may require a new plant.”

Al-Sayed also confirms that an award is nearing for Bahrain’s onshore exploration and production concession, for which Denmark’s Maersk, and US firms ExxonMobil Corporation and Occidental Petroleum have been shortlisted.

“We are in the process of evaluating three shortlisted bidders,” he says. “We expect that some time this year, probably around July or August, we will be in a position to select one of the three to form a joint venture.”

Bapco is already implementing several other major projects, including a $350m lube oil plant and a gas desulphurisation scheme (MEED 28:4:08).