Bahrain's BAPCO Ready to Invite Bids for Proposed $600 Million LNG Terminal

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Bahrain Petroleum Company BSC (BAPCO) (Awali, Bahrain), Bahrain's state-controlled refiner, will soon invite tenders for its proposed $600 million, 400 million-cubic-feet-per-day liquefied natural gas (LNG) terminal.

Confirming the decision, Essa Al-Ansari, the general manager of BAPCO, indicated that 14 international firms have qualified for the bidding process. The companies include Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands), Punj Lloyd Limited (BSE:532693) (Gurgaon, Haryana), Hess Corporation (NYSE:HES) (New York, New York), Samsung Construction & Trading (Seoul, South Korea), IHI Corporation (TYO:7013) (Tokyo, Japan), Al-Hassanain Company (Bahrain), Mitsubishi Corporation (TYO:8058) (Tokyo), Korean Gas Corporation (SEO:036460) (Gyeonggi-Do, South Korea) and Tecnicas Reunidas S.A. (MCE:TRE) (Madrid, Spain), all of which will submit tenders within 16 weeks after the request for proposal is issued. BAPCO also has announced plans to double capacity of the proposed LNG terminal in the future.

BAPCO officials have indicated that construction will commence immediately after selection of the winning bidder, which will be completed by the first quarter of next year. The project is expected to ready for operations by 2014. The decision to construct the LNG terminal was made after a study commissioned in October 2008 revealed a critical need for LNG terminals in Bahrain to ensure energy security. The report also identified the Bin Salman Port as the best location for the project.

BAPCO is engaged in full life-cycle energy development in Bahrain. The company operates the 267,000-barrel-per-day refinery at Sitra and 14 storage facilities, with a total capacity of 14 million barrels. The storage tanks hold aviation turbine fuel, gasoline, naphtha, diesel oil, liquefied petroleum gas, fuel oil and heavy lube distillates. BAPCO's products are exported to countries in the Middle East, Southeast Asia, Africa and India. As part of its strategic development plan, the company plans to invest $5 billion on new refinery projects. As part of the initiative, BAPCO proposes to invest $2 billion to increase the capacity of the Sitra refinery to 350,000 barrels per day. The capacity augmentation is expected to facilitate higher production of Saudi Arabian crude. BAPCO also will increase production of its Bahrain gas field from 32,000 barrels per day to 100,000 barrels per day. The gas field provides nearly 17% of the refinery feed. The remainder is procured through a 54-kilometer long pipeline from Saudi Arabia.

BAPCO has also unveiled its 15-year road map, with specific focus on projects for the 2012--17 period. The company also has retained renowned global consultant Arthur D. Little (Tustin, California) to provide strategic vision and direction to strengthen its core business operations, consolidate its position in the Middle East's energy market, and provide energy security.

In a related development, GS Engineering and Construction Corporation (SEO:006360) (Seoul, South Korea) has secured a $70 million contract to build a wastewater treatment facility at the Sitra refinery. The company secured the contract, beating other bidders such as CTCI Corporation (TPE:9933) (Taipei, Taiwan) and Samsung Engineering Company Limited (SEO:028050) (Seoul). The project, which will be completed in 27 months, will process 19,200 cubic meters per day of wastewater. Earlier, CH2M-Hill (Englewood, Colorado) completed the front-end engineering and design for the project.

With its other projects on schedule, BAPCO has decided to scrap its proposed $150 million port and oil storage facilities project, citing unviable economical and technical reasons. The project, which was planned in March 2007, has faced several setbacks. The facility was to be jointly developed by BAPCO in association with the Arab Petroleum Investment Corporation (APICORP) (Dammam, Saudi Arabia) and Independent Petroleum Group Co SAKC (KUW:IPG) (IPG) (Safat, Kuwait). The feasibility study was completed by Emirates National Oil Company LLC (Dubai, United Arab Emirates), in partnership with APICORP and IPG. Audex Pte Limited (Singapore) was awarded the front-end engineering and design contract for this facility. About 17 domestic and international companies had pre-qualified for the engineering, procurement and construction contract for the project.

Growing economy and surging natural gas consumption have made it imperative for Bahrain to augment its refining capacity. In the next 10 years, domestic natural gas consumption is forecast to increase to 2 billion cubic feet per day.

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