Bahrain Launches $1.3 Billion - 1,000 MW Power, Water, and Downstream Chemical Complex

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Bahrain, which is sometimes referred to as one of the 'less affluent' UAE states, is pursuing a determined strategy in announcing a spate of new projects to meet the challenges of desalinated water supply demand, power supply gaps, and the development of downstream industry to add domestic value to the energy resources on tap locally. "Less affluent" is already a comparative term in a region with some the highest per capita incomes in the world and is likely to be even less applicable as the new projects come on stream. See related December 8, 2003 news article: Bahrain's Oil and Petroleum Industry Plays Catch-Up with $3 Billion Projects.

Site selection for a new $1.3 billion combined petrochemical, power and water generation complex is underway, according to a spokesman for the Kuwait Finance House (Bahrain) (KFH) in the third week of September. The complex's location will be finalized soon with the kingdom's Ministry of Industry.

An international consortium consisting of General Electric Energy (NYSE:GE) (Fairfield, Connecticut), Weir International (Chicago, Illinois) and Stone & Webster (Shaw Group) (NYSE:SGR) (Baton Rouge, Louisiana), in cooperation with Uhde (Frankfurt:TKA)(Dortmund, Germany) and Chicago Bridge & Iron Company (NYSE:CBI) (Amsterdam, Netherlands) has carried out successful feasibility studies on the project, which will have a power generation capacity of 1,000 MW, a water output of 30 million gallons of water a day, and will also produce six key petrochemical products. Chemicals produced from the plant will include 315,000 tons of ethylene chloride (EDC), 500,000 tons of caustic soda, 167,000 tons of liquefied petroleum gas (LPG), and 44,000 tons per annum of gasoline stream, in addition to some quantities of hydrogen and sulfur.

When operating at full capacity the complex will use 255 million cubic feet of natural gas per day, which will be sourced, in the region. The project will contribute to Bahrain's downstream industrial development and will also produce numerous infrastructure and economic benefits for local and international companies.

KFH general manger, Abdulhakeem Alkhayyat said, "The integrated nature of this world-class project, which will be designed according to the highest international safety and environmental standards and using the latest technologies, is aimed at ensuring maximum efficiency and cost effectiveness. With the support and participation of world-class partners, we look forward to moving ahead with the next phase of this first-of-a-kind regional product." He added that the project is expected to be completed by the first quarter of 2008. At the peak of construction the project will provide work for 3,500 people and will create 500 new permanent jobs.

Finance for the project will be through a combination of $900 million equity and $400 million debt. KFH will make the financial arrangements after obtaining the required licenses and the preparation of the private placement memorandum, said Alkahayyat.

Significant export opportunities will be available for the high-demand petrochemicals produced by the complex, and KFH is now engaged in discussions with off-takers supplying markets such as China, India, Japan, Australia, and other international markets. KFH Bahrain was established in 2002 as a subsidiary of the Kuwait home office, which has been involved in industrial projects for 25 years.

Even with this and other new projects in Bahrain, the annual increase in the demand for power and the high demand for potable water will create long-term requirements, which demand the construction of more capacity, in addition to the base requirements, new downstream industrial plants will require power feeds. See related August 12, 2004 news article: Construction begins on $500 Million Al-Ezzel Bahrain Power Project and related September 10, 2004 news article: Doosan Wins Power and Water Project as Emirate's Development Making Fujairah a Foreign Investment Target.