Neste and Bapco Open Bahrain's 400,000-Ton Lube Base Oils Plant

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Bahrain's energy minister, Abdulhussain Mirza, said that the country is well on its way to becoming a world leader in the production of high-quality lube base oils at the official opening of the new $450 million lube base oil plant this week. Commercial operations started at the plant in October.

The project is a joint venture between the Bahrain Petroleum Company (Bapco), the Oil & Gas Holding Company (Nogaholding) and Neste Oil (HEL:NES1V) (Espoo, Finland). The plant produces premium quality very high viscosity index (VHVI) Group III base oils for use in blending top-tier lubricants. The facility has an annual production capacity of 400,000 tons.

Matti Lehmus, Neste's executive vice president, said that the new plant was a great achievement for all of the joint venture partners, as the facility is one of the world's largest units of its type and features the latest technology. He added that, due to close cooperation between the partners, the joint venture had been able to get the plant up and running within the very challenging three-year schedule originally announced.

Neste's NEXBASE proprietary technology, which is being used at the plant, produces high-performance engine oils and industrial lubricants that are designed to meet increasingly stringent environmental and performance requirements and work reliably even in tough conditions. The fuels are sulfur-free and assist in reducing exhaust and particulate emissions. Reduced flow resistance and friction properties give low-temperature fluidity and reduces fuel consumption.

Neste has a 45% stake in the joint venture, and its share of project investment was $173 million. The company is responsible for the sale and marketing of the plant's output, which increases the company's total Group III base oils capacity from 250,000 tons per year to 650,000 tons. The new plant's base oil output varies in viscosity from 4 centistokes (cSt) to 8cSt. Neste Oil's sales volumes will increase further after the end of 2013 when a partnership with Abu Dhabi National Oil Company (ADNOC) will increase NEXBASE annual production capacity to almost 1.3 million tons.

Bapco is responsible for the operation of the plant. Samsung Engineering Company Limited (SEO:028050) (Seoul, South Korea) was the construction contractor for the project.

Feedstock for the plant will be supplied from the low-sulfur diesel hydrocracker that was commissioned at the Bapco refinery in 2007.

The energy minister said that the project was the first joint venture in the refining sector in Bahrain and would contribute to Bapco's remaining competitive and improving operating margins in addition to complying with environmental laws. The new technology being used will improve the competitive advantage of Bahrain's refining industry and provide opportunities for synergy in other fuel product business segments.

Nogaholding is the business and investment arm of the National Gas & Oil Authority (NOGA) and steward of the Bahrain government's investment in Bapco and other domestic gas and fuel companies.

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