Bapco: History & Achievements

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Bapco History Achievements
3rd MEETING FOR THE GULF STANDARD COMMITTEE FOR
OIL GAS INDUSTRIES 4 6 September,
2007 Doha, State of Qatar

• By Ali Hassan Alaradi
• Senior Chemist
• Bahrain Petroleum Company BSC (closed)

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Content

• Introduction to Bapco
• Bapco Refinery
• Influence of Supply Demands
• Strategic Investment Projects
• Concluding Remarks

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History of Bapco
1982
BANOCO Assumed Oil Gas Production/Marketing
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History of Bapco (contd.)
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Configuration of Bapco Refinery
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Refinery Configuration before LSDP

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Refinery Configuration Post LSDP
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History of Bapco Refinery

• Refinery started up in July 1936 at an original
  capacity of 10 MBPD
• Refinery Started up with two crude units which
  are still operating after 71 years in service.
• At present Refinery has five crude units and the
  feed rate is up to 265 MBPD (1968)
• FCCU was built in mid 1940s with an original
  capacity of 18 MBPD. Upgraded to 43MBPD.
• In 1967 Bapcos first Diesel Hydrotreater was
  installed.
• Original Capacity 15 MBPD. Now 26 MBPD.

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History of Bapco Refinery (contd.)

• Low Sulphur Fuel Oil Complex (LSFO) incorporated
  In 1973, to increase the Refinery Hydroprocessing
  capability
• LSFO underwent major modification In 1983 to
  modify 2HDU to a mild hydrocracker.
• 2HDU was one of Bapcos most profitable units.
• In-line blending project was completed in April
  2000.
• Kerosene Merox unit was added in 2001

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Bapco Refinery Products

• Refinery products are LPG, Naphtha, Gasoline,
  Kerosine, Diesel, Fuel Oil and Asphalt.
• Maximum middle distillate (kerosene diesel)
  yield, at about 55 vol.
• Jet fuel produced for Bahrain International
  Airport.
• LPG Gasoline are mainly produced for the local
  market.
• Effective 2000 all gasoline is unleaded
• Bapco Refinery is an export Refinery 90
  products exported.
• Majority of petroleum products are exported to
  Asia and Africa

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Bapco Products are governed by-

• Customer Requirements which incorporate-
• US Military Standards
• UK Defence Standards
• ASTM/IP Standards
• ISO Standards
• BS EN590

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• Influence of Supply Demands

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Supply Demand

• Bapcos Operations are driven by the Oil Market.
  This necessitate rapid response the changes in
  the Market.
• Bapco must be geared to produce the Fuel of the
  future.
• Bapco is exposed to the driving forces of the
  Global Economy such as Prices, Environmental
  Legislation, etc

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Success of any Oil companydepends on many
factors, among those-

• World Refining Capacity Oil Demand
• Product Specification
• World Economy Products Demands
• Prices Refining Margins

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• World Refining Capacity
• Oil Demands

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World Refining Capacity

• Additional refining capacity is needed.
• Over the past decade refining investment has not
  kept paced with demand growth.
• Ratio of refining capacity to demand dropped from
  110 in mid-90s to 101 in 2005.
• About 76 refineries of 300,000 bpd each would be
  required to restore ratio to traditional 105

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Worldwide Diesel Demand

• Diesel demand will continue to increase.
• Market for cleaner diesel fuels will also
  increase.
• Growth in diesel demand will be higher than that
  of gasoline.
• Bahrains local diesel market is small most of
  Bapcos production is exported.

Supply/Demand data from Presentation by A.
Taraborrelli, CEO - ENI 7th Annual European Fuels
Conference March 14-15, 2006
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• Product Specifications

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Diesel Specification

• Middle distillate (kerosene and diesel) are key
  products 55vol of yield
• Markets determine the product specifications
• Diesel has seen major changes in specifications
  in recent years

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Bapco Diesel Product Specifications

• Bapco will be able to make excellent quality
  diesel, on a par with the best in the world
• Diesel specifications are most stringent
  envisaged for foreseeable future
• Bapco product can be sold anywhere in the world
• Added benefit for the local market will be
  improved diesel quality with reduced
  environmental emissions

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Changes in Diesel Specifications

• Objective is to make clean fuels which do not
  pollute the environment.
• Most talked about issue is sulphur.
• EU Japan are world leaders in adopting
  stringent specs.
• High growth countries like China India are
  following pace with regards clean air
  initiatives.
• ME lags behind EU US but expected to tighten
  beyond 2010.
• ME exporters will be forced to adopt tighter
  specs in response to market demands.

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• World Economy
• Oil Products Demand

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World Economy and Oil Product Demand

• Demand on Oil Products will increase, except for
  fuel oil
• Alternative energy sources have not significantly
  altered the energy balance
• Market will be impacted by Bio-Fuel
• Product demand will continue to be dominated by
  gasoline and diesel
• Fuel oil demand will shrink
• Asia will be key for oil demand growth

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• Prices Refining Margins

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Prices and Refining Margins

• Refining margins (i.e. profit) are always
  cyclical
• In 1990s very few refineries made money
• In the last few years margins have improved
  considerably
• Stability of prices Provides opportunity for
  investment
• Fuel oil production must be minimized as it loses
  money (price of fuel oil is less than crude)
• Better margins will persist due to global
  shortage of refining capacity

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Strategic Investment Program (SIP)
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Why Should We Invest ?

• Implement the latest technology to produce high
  quality products with minimum environmental
  impact
• Create flexible operations capable of responding
  to changes in supply demand chain
• Maximise the range of high value products
• Retain the existing staff hire additional
  skilled manpower

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Strategic Investment Program (SIP)

• US 1.1 bn investment includes
• Low Sulphur Diesel Production (LSDP) Project -
  US 695 MM
• Refinery Gas Desulphurisation (RGD) Project - US
  150 MM
• Waste Water Treatment (WWT) Project - US 120 MM
• Instrument Modernisation Project (IMP) - US 60
  MM
• Lube Base Oil Project US 300 MM
• Oil Storage Facility Project under feasibility
  study - US 95 mm

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Low Sulphur Diesel Production Project (LSDPP)

• Produce 10 ppm sulphur diesel currently pool is
  6500 ppm
• Response to environmental concerns and customer
  requirements
• Increase yield by producing higher value products
• Centred around 60 MBPD Hydrocracker
• Refinery will have the capability to produce
  100,000 BPD of Ultra Low Sulphur Diesel
• Meet majority of most stringent world wide Diesel
  specifications

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LSDPP Economics

• The LSDP project cost is about 695 million
• The project will increase the yield of more
  valuable refinery products, bringing in
  incremental annual revenue of around 200
  million, yielding a return on investment of
  around 22.
• It will also provide the foundation for the
  implementation of further profitable projects

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Concluding Remarks
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Concluding Remarks

• Bahrain Refinery witnessed a number of upgrades
  to increase its capacity and improve the quality
  of its products
• Bapco products comply with the most stringent
  international specifications
• Bapco will be able to supply Diesel products to
  US Europe Markets.
• Bapco has made significant investment and
  commitment to improve its environmental
  compliance
• Over US300 MM on environmental projects with no
  return on capital
• Bapco moves forward with confident to achieve
  further progress for the country

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Concluding Remarks (Contd)

• Substantial drop in the ratio of the worldwide
  Refining Capacity to Demand will increase the
  demand on Oil Products, transportation Fuel in
  Particula
• Stability of Oil Prices is essential for
  promoting investments
• Profitability and compliance with Environmental
  Legislations are the driving forces for Bapcos
  investments
• Commissioning of LSDP complex at Bapco Refinery
  is a significant milestone in the history of the
  company.
• Retaining existing staff and attracting skilled
  manpower is a strategic aim for Bapco

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Thank You