Bapco to tender first package for $6.5bn refinery expansion in 2013

12 December 2012

Package for construction of pipeline will be be followed by feed tenders for process units

Bahrain Petroleum Company (Bapco) will release the engineering, procurement and construction (EPC) contract for the $6.5bn rehabilitation and expansion at its refinery complex at Sitra in the kingdom early in 2013.

The contract is for the pipeline that will transfer crude oil from Ras Tanura in Saudi Arabia to the Bahrain facility. The front-end engineering and design (feed) is being carried out by Australia’s WorleyParsons and is now 90 per cent complete.

“Right now, there is a memorandum of understanding between Bapco and Aramco,” says Abduljabber Karim, Bapco’s general manager of major engineering projects. “This will be a 70-kilometre pipeline and this will be essential to provide the additional crude oil for the expansion plan.”

The rehabilitation of the refinery itself has now left the feasibility phase and is entering the preliminary design and engineering phase.

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

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

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

The indications are that each package will have its own feed package tendered, although this has not been confirmed at this point. However, Karim, speaking at the MEED Middle East Brownfield Forum in Abu Dhabi, did give some clues as to the timeline for potential feed contracts.

“We will need to begin the feed for the offsites and utilities in the third quarter of 2013 because the most vital aspect of this project will be to integrate the new facilities into the existing complex,” said Karim.

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 commission incrementally between 2017 and 2020.

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

“This is probably going to depend on whether all of the financing can be secured at the start of the project by Bapco,” said a contracting source on the sidelines of the MEED Brownfield conference. “If it can they will want to get it all built as soon as possible.”

MEED reported in late November that Bapco is expected to appoint an adviser for the expansion project in December.

The technology provider contract is expected to be put out to tender via Bahrain’s tender board in mid-2013. The probable date has been set at 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.  

The EPC packages for the process units are expected to begin tendering in mid to late 2014.

About 220,000 barrels a day of crude 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 bring has not been released. Industry sources told MEED in June that it should be about 100,000 b/d.

The vast majority of whatever additional capacity is added will be middle distillates, or diesel fuel.  

One possible delay to the scheme could be a shortage of gas in Bahrain. 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 project was a prospective liquefied natural gas terminal (LNG), but this has been delayed for many months. Additional gas will be vital for any refinery upgrade so Bapco are now believed to be looking at potential alternatives.

“One solution could be a floating storage and regasification units that will store LNG that can then be used by the refinery,” says Karim. “We are looking at other potential solutions too.”

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