Bapco receives project management bids for $9bn Sitra refinery expansion

16 September 2013

Bahrain oil company also shortlists contractors for design contract due to be released in 2014

Bahrain Petroleum Company (Bapco) has received bids and prices for the project management consultancy (PMC) contract for the $9bn-plus rehabilitation and expansion of its Sitra refinery complex.

Only two engineering consultancies have bid for the PMC deal. They are:

  • Engineers India (India) $124.6m
  • Foster Wheeler (US) $189.7m

Sources close to the scheme say many engineering consultancies refused to participate in the bid round, citing the extremely low price offered by Engineers India as the reason.  

“Many companies felt there was no point bidding if there was next to no chance of being successful,” says an executive from a major engineering consultancy. “The PMC bid usually accounts for about 3 per cent of the total budget, but $125m is barely half that.”

The engineering consultancies who were shortlisted alongside Foster Wheeler and Engineers India, but declined to participate are:

  • Fluor (US)
  • Jacobs (US)
  • KBR (US)

The PMC is expected to total about 1 million man-hours, making the Engineers India bid extremely aggressive. It is also not clear whether or not the price will be accepted because the Bahrain Tenders Committee usually requires at least three bids with contracts of this value.

A senior executive from Bapco declined to comment when contacted by MEED.

The tender for the front-end engineering and design (feed) contract is expected to be released in the first quarter of 2014. The potential bidders for the feed have been shortlisted and five international contractors have been selected. They are:

  • Bechtel (US)
  • CB&I Lummus (US)
  • JGC Corporation (Japan)
  • Technip (France)
  • WorleyParsons (Australia)

The man hours for the feed is expected to be about 1 million.

A decision has yet to be made as to whether all of the process units will be constructed simultaneously. At present, they are planned to becommissioned incrementally between 2017 and 2020.

The rehabilitation has been split into four packages. These are:

  • Offsites and utilities
  • Crude unit and associated facilities
  • Hydrocracker and associated units
  • Residue conversion project

The residue conversion unit has been identified as the most important facility as it will process heavier crude types into lighter grade products.

Another possible strategy is to build the residue conversion unit first and use the money generated from that unit to fund the remaining work.

The technology provider contract is expected to be tendered via Bahrain’s tender board in mid-2013. The probable date has been set for July, unless Bapco’s engineering team identifies a specific provider as being the only company capable of providing the right technology. In that case, a formal negotiation will take place between the two parties.

About 220,000 barrels a day (b/d) of oil is currently provided by Saudi Aramco, with 40,000 b/d coming from Bahrain’s own reserves. The exact increase in capacity that Bapco’s rehabilitation and expansion will provide has not been released. Industry sources told MEED in June that the figure should be about 100,000 b/d.

The vast majority of the additional capacity will be middle distillates or diesel fuel.

A possible delay to the scheme could come from a shortage of gas in the country. A number of projects have been mooted to supply the kingdom with extra gas, but many of these have been delayed due to the Arab Uprisings that began in February 2011. The main scheme was a prospective liquefied natural gas (LNG) terminal, but this has been delayed for many months. Additional gas will be vital for any refinery upgrade and Bapco is now believed to be looking at potential alternatives.

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