Bahrain’s Bapco sees oil trading opportunities as it expands refinery

A bird’s eye view of an offshore oil platform in Bahrain. (AFP)
Updated 10 March 2019
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Bahrain’s Bapco sees oil trading opportunities as it expands refinery

  • The expansion will boost the capacity of its Sitra oil refinery to 360,000 barrels per day
  • The small non-OPEC Gulf oil producer, with around 124.6 million barrels of proven reserves, gets its oil revenue from two fields

DUBAI: Bahrain plans to commission its expanded oil refinery by early 2023, allowing it to sell and trade more petroleum products in the Gulf region and Asia, the chief executive of state-owned oil company Bapco said.
The expansion will boost the capacity of its Sitra oil refinery to 360,000 barrels per day (bpd) from the current 267,000 bpd, Bapco CEO Pete Bartlett said.
Bapco currently receives 220,000-230,000 bpd of crude from state oil company Saudi Aramco and will import the same volume during the refinery’s expansion, with commissioning scheduled for late 2022 or early 2023, Bartlett said.
In October 2018 Aramco and Bapco announced the commissioning of the AB-4, a new phase of the Saudi-Bahrain crude oil pipeline, capable of transporting up to 350,000 bpd, which would serve Bahrain’s planned refinery expansion.
“We are on track,” Bartlett said of the expansion.
The small non-OPEC Gulf oil producer, with around 124.6 million barrels of proven reserves, gets its oil revenue from two fields: the onshore Bahrain field, and the offshore Abu Safah field, which is shared with Saudi Arabia. The Bahrain field produces around 50,000 bpd.
Bahrain and top oil exporter Saudi Arabia split revenues from the 300,000-bpd Abu Safah field, where production is overseen by Aramco.
“Aramco and Bapco are strong partners and so our purchases of feedstock are unaffected by what OPEC is doing in terms of managing its own sales,” Bartlett said when asked whether Saudi exports to Bahrain would be affected by OPEC-led supply cuts.
The refinery expansion and resulting production increase may prompt Bapco to focus more on spot trading, but the company is unlikely to establish its own trading joint venture like other national oil companies in the Middle East, Bartlett said.
“We will buy more feedstock and will be trading more products,” Bartlett said, adding the company would continue to look also at trading spot cargoes.
“We will be looking to develop off-take arrangements and sale arrangements further but our core markets will remain within the greater GCC (Gulf region) and increasingly we will find ourselves competing for opportunities in Asia.”
Around 88 percent of the crude that Bapco refines comes from neighboring Saudi Arabia, and the rest from Bahrain’s field.
The refinery’s expansion project financing – which is over $4 billion in size – will be finalized in March, Bartlett said.
“We have been actively working with a number of export credit agencies and commercial banks ... We’re on the cusp of concluding the financing arrangements.”
Bapco had awarded contracts for the project to a consortium comprising TechnipFMC, Samsung Engineering and Tecnicas Reunidas.
Bahrain announced last year its largest ever oil discovery, off the coast, estimated to have at least 80 billion barrels of tight oil, and deep gas resources in the region of 10-20 billion cubic feet.
It is talking to US oil companies with shale oil expertise about developing those resources and hopes to have an interested company by the end of the year, the country’s oil minister said last month.


Selling sketches and clothes, Libyan women set up businesses against the odds

Updated 18 min 16 sec ago
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Selling sketches and clothes, Libyan women set up businesses against the odds

  • Libya has only a tiny private sector and the economy is dominated by the state
  • Cumulative inflation over the last four years has seen real incomes lose more than half of their purchasing power

TRIPOLI: When inflation began eating into her state-paid salary Libyan architect and assistant professor Seham Saleh started selling drawings over the Internet to help pay the bills.
She joins a growing number of Libyan women launching start-ups in the conservative Arab country, where many still think a woman’s place is in the home but where the strains on personal and family income following years’ of political chaos have forced women to look for more work.
Libya has only a tiny private sector, which means there is a market for locally-produced goods. The economy is dominated by the state, which employs most adults under a structure set up by Muammar Qaddafi, who was toppled in 2011.
Men are the traditional breadwinners, although around 30 percent of women were in the labor force as of 2015, according to a UN report.
“I cannot live on my assistant professor salary of 1,000 dinars ($256) even if it is paid out,” said Saleh. She has been selling drawings of people in Libyan dress or book marks she created on a computer.
“Thank God... people wanted to buy the products,” she said. She also does freelance work as an architect.
Once one of the richest countries in the region, the chaos and civil war that ensued after the fall of Qaddafi has seen Libya’s living standards erode. Little is now produced in Libya other than oil, even milk is imported from Europe.
Cumulative inflation over the last four years has seen real incomes lose more than half of their purchasing power, and the government effectively devalued the dinar last September.
A cash crisis means public servants often do not get their salaries paid out in full. Lenders have no cash deposits as the rich prefer to hold their cash themselves, rather than deposit it in a bank.
Women rarely had jobs outside of sectors such as teaching, although the need for more family income has changed the situation, said Jasmin Khoja, head of a women’s business support venture.
Her organization, the Jusoor center for studies and development, has trained some 33 would-be female entrepreneurs, offers legal advice and office space as women often can’t afford their own.
While Seham’s “Naksha” art business is in its early stages, others such as Najwa Shoukri’s start-up are growing fast. She started designing clothes from home in 2016, and selling them online.
Now, together with five other women, she has a workshop selling 50 pieces a month and plans to open a shop next year on Jaraba Street, the main fashion shopping avenue in Tripoli.
To make the shop a success her output would have to rise to 150 pieces a month. Her brother and family have contributed to investments worth 10,000 dinars.
The biggest challenges for start-ups are legal hurdles and the lack of electronic payment systems.
Some Libyan commercial laws go back to the 1960s and are aimed at big corporations such as oil firms, not start-ups. Under these regulations firms need to deposit thousands of dinars.
“Banks do not give loans, which stops projects and makes them unable to grow or employ other women and young people,” Khoja said.
Undeterred, Mayaz Elahshmi started a business last week training women to fix computers and smartphones.
“There is big demand as many women are reluctant to go to a phone shop where men work, as they have personal files on their phones.”
Six people came to her first training session, each paying 30 dinars.