MANAMA, 8 February 2005 — The government-owned Bahrain Petroleum Company (Bapco) yesterday signed a $1.011 billion financing package with a number of banks for the upgrading of the country’s sole oil refinery.
The package included a $370 million commercial facility, a $330 million Islamic lease facility and a $311 million tranche guaranteed by Japan Bank for International Cooperation and Nippon Export Credit Agency.
Banks involved in the financing include BNP Paribas, HSBC Bank, Mizho Bank, Arab Banking Corporation, Gulf International Bank, National Bank of Bahrain, Kuwait Finance House, Dubai Islamic Bank and Arab Petroleum Investment Corporation.
“The financing is based on a commodity structured scheme which relies on both Bapco’s corporate strength and strong sovereign support”, said Bapco’s Chairman and Minister of Oil, Sheikh Isa ibn Ali Al- Khalifa.
Japanese oil engineering company JGC Corporation has been awarded the construction contract of a new hydrocracker unit with a capacity of 40,000 barrels a day to produce low sulfur diesel.
Construction is expected to start next month. The low sulfur diesel project is the main element of Bapco’s strategic investment program. Its main objective is to reduce the current high sulfur content of Bapco’s diesel from an average of 0.7 percent to 0.001 percent to give the company a competitive position in the international oil market. The project is expected to be completed in early 2007.
JGC’s contract also involves upgrading an existing hydrocracker to produce low sulfur diesel. A new Refinery Gas Desulphurization unit with a capacity of 45,000 b/d will be also built as part of the modernization program.
Bapco has already invited bids for the engineering, procurement and construction of this project from four international companies — French company Technip, Chicago Bridge and Iron, Foster Wheeler (FWLRF) and Fluor Daniel (FDGT). Bids are due in April.
When the diesel project is completed, Bapco will have the flexibility to produce gasoil, kerosene and liquefied petroleum gas from the unit.
“The return on investment from these projects is estimated at 20% to 24%,” said Bapco’s Chief Executive Mustafa Al-Sayed.
