A framework agreement was put in place in mid-August between Bahrain Petroleum Company (Bapco)and Finland's Nestefor the estimated $200 million project to build a lube base oil refinery at Bapco's Sitra facility. Completion is due in late 2008.

The project, a 60:40 joint venture of Bapco and Neste, entails the routing of about 12,000 barrels a day of unconverted oil from the existing hydrocracker to a unit which will convert the feedstock to lube base oil, predominantly for export. The US' Chevron Corporationcarried out the engineering and design package and Neste will input some proprietary technology, after which the US' Jacobs Engineeringwill begin front-end engineering and design (FEED) studies (MEED 17:12:04).

Another element of Bapco's investment programme, the refinery gas desulphurisation (RGD) project, is also making progress. A letter of intent is close to being issued to Foster Wheeler Italianafor the engineering, procurement and construction (EPC) contract. A slight delay has been caused by the need for the government to approve an increase in the value of the contract, to about $140 million from about $120 million, due to rising materials costs. Foster Wheeler was low bidder for the work when prices were opened in August (MEED 12:8:05).