The company managed the Feed phase of a world-scale joint venture project between nogaholding and Kuwait’s Petrochemical Industries Company (PIC), which will convert naphtha feedstock from the Bahrain Refinery into higher-value aromatics

Bapco achieved several key milestones on major projects during 2016 that will collectively assure the company’s long-term sustainability, providing a sound foundation that supports Bahrain Vision 2030.

Among the key projects is the multi-billion dollar Bapco Modernisation Programme (BMP) consisting of a group of related projects managed in a coordinated way to create the Bapco of the future. It is one of the largest projects ever undertaken in the kingdom.

The resulting more complex refinery with increased exports of higher value products will generate positive cash flow for the Kingdom of Bahrain while providing new jobs and business opportunities for Bahrainis. Bapco will also benefit from a more competitive, resilient and energy efficient facility, and one better equipped to meet future stringent environmental compliance regulatory standards and goals.

The main elements of the BMP are a new Crude and Vacuum Unit (Technip, Italy); Residue Hydrocracking Unit (Chevron Lummus Global, USA); VGO Hydrocracking Unit (Chevron Lummus Global, USA); Diesel Hydrotreating Unit (UOP, UK); Sulphur Recovery Units (Worley Parsons, UK); Hydrogen Plants (Technip Stone & Webster, USA).

The Front End Engineering and Design (Feed) work was completed in the first quarter of 2016 by Technip – Italy.

Technip, JGC, Fluor and CB&I were shortlisted and approved by the Tender Board as prime Bidders for the Engineering, Procurement and Construction (EPC) contract. The evaluation of bids was completed in record time, with negotiations expected to start in March 2017, says Bapco in its Annual Review.

BMP Site Preparation Works comprise Package A covering Process units and inside refinery fence areas and Package B covering temporary site facilities outside refinery fence. Contract for Package A was awarded to Down Town Construction on 16th February 2017. Contract for Package B was awarded to Al Hassanain on February 2, 2017.

Bapco, along with its Joint Financial Advisors BNP Paribas and HSBC, decided that BMP financing would be structured on a limited-recourse basis to the Shareholders of Bapco, with Export Credit Agencies (ECAs) as the principal source of funding.

During the year Bapco appointed the following Lenders’ Advisors as agreed with the ECAs: Jacobs Consultancy as Technical Advisor; Allen & Overy as Legal Advisor; Environmental Resource Management as Environmental & Social Advisor; JLT as Insurance Advisor; BDO as Model Auditor and Nexant as Market Advisor. All Lenders’ Advisors began work in 2016. This project financing effort will support securing a final investment decision for the BMP from the stakeholders during 2017.

BMP has received environmental approval from Bahrain’s Supreme Council for Environment (SCE) on 4th December 2016, following the achievement of Environmental and Social Impact Assessment (ESIA), which was undertaken over the last two years. With this, the ESIA of BMP has been approved by the SCE. This substantial process was conducted in line with the national and international regulatory standard requirements, intended to affirm the BMP’s adherence to industry best practice in mitigating overall adverse environmental and other social impacts.

A-B PIPELINE

The Bapco refinery receives Arabian Light crude from Saudi Arabia via an overland and subsea pipeline built in the 1940s. This is being replaced by a new 30-inch diameter pipeline between Saudi Aramco’s Abqaiq plant and Bapco’s refinery through Qurayyah, a total distance of approximately 113 kms. The new pipeline will have the capacity to supply up to 350,000 barrels per day of Arabian Light crude oil to the refinery.

EPC contracts have been awarded for (i) KSA Onshore, (ii) Offshore and (iii) Bahrain Onshore segments. Overall progress was slightly ahead of plan by year end, and is on track for a Q1 2018 commissioning of the pipeline.

The Saudi Arabia onshore section runs 43 kms above ground. The EPC work was awarded to Al Robaya Holding Company. The detailed engineering design has been completed. Major materials have been procured and are available on site. Construction of right-of-way access, foundations, pipeline welding are in progress.

The offshore section runs 42 kms. The EPC work was awarded to National Petroleum Construction Company (NPCC) of the UAE. The detailed engineering design has been completed. The total pipe length was delivered to Saudi coating contractors during the year. NPCC carried out a marine survey to select the best access for marine construction vessels.

The Bahrain onshore section runs 28 kms underground. Construction work was awarded to Ramsis Engineering on December 14, 2016. The detailed engineering design has been completed, including the land route radar mapping and topographical survey. Twenty four wayleave crossings were also approved. All pipeline materials are available for transportation from Saudi Arabia site office.

AROMATICS PRODUCTION COMPLEX (APC)

Bapco spearheaded a number of onshore and offshore activities in 2016

Bapco managed the Feed phase of a world-scale joint venture project between nogaholding and Kuwait’s Petrochemical Industries Company (PIC), which will convert naphtha feedstock from the Bahrain Refinery into higher-value aromatics such as benzene and paraxylene. Technip of Italy issued the complete Feed package in August (including a 30 per cent 3D model review) and a detailed Environmental Impact Assessment Study was initiated.

Bapco’s Major Engineering Projects (MEP) Division provided technical support and supervised construction work on four land reclamation projects being undertaken on behalf of nogaholding and the Ministry of Housing in approximately 200 hectares of sea off the coast of Sitra Island. MEP’s goal was to ensure that Bapco’s assets and facilities were protected, permits to work were implemented and Environment, Health and Safety (EHS) procedures were followed during dredging and reclamation activities.

INFRASTRUCTURE PROJECTS

Bapco’s Engineering Services Unit achieved a number of project landmarks in 2016. These included but were not limited to: award of a contract to install and commission a 1,000 metric tonne capacity Sulphur Handling Facility and two new jacketed Sulphur Pumps; start of construction of a new 20-inch gas supply line from Hidd Metering Station to Hidd Industrial Area Distribution Point; start of construction on an extension of an existing pipeline header to supply gas to new customers at South Alba Industrial Area; replacement of the low sulphur fuel oil complex substation; completion of Feed work and tendering for EPC work for a project to firm up the No 3 API Oil Separator; the start of major construction work to relocate/modify the A-B pipeline and culvert, gas pipelines, Riffa Power Plant Diesel Pipeline and Awali electric power feeder cables by Bapco-approved contractors on the Alba and Nuwaidrat Interchange (Flyover) project in liaison with the Ministry of Works; and completion of the two-storey structure of a new Unified Command and Control Centre.

REFINERY PERFORMANCE

The year 2016 was challenging for Bapco from a process and personal safety perspective, but nevertheless, one of the most profitable years in recent times was achieved for the shareholders. The year ended on a high note with the safe and successful completion of the largest ever refinery Turnaround and Inspection (T&I) programme during the period October to December 2016.

Refinery crude throughout averaged 257,766 barrels per day (bpd), slightly below the budgeted 258,098 bpd. At 95.94 per cent the Refinery Operational Availability (Solomon Rolling Average) exceeded the 2015 figure but was lower than the 2016 business plan as a result of unplanned shutdowns. With a total of 7 Refinery Reliability Clock (RRC) resets for the year, the operational availability was lower than target, but a maximum run length of 128 days was achieved between April and August 2016, which is a good milestone for reliability. RRC is a key performance indicator used to track unplanned shutdowns of length greater than 24 hours.

Bapco’s response to each reset was disciplined, professional and timely. The cornerstone of the refinery’s 2017 operating budget is greater focus on reliability and workforce engagement with leading industry processes and practices, to re-instate the favourable reliability trend of the previous three years.

The refinery’s yield of high value middle distillates was over 56 vol per cent, and the combined yield of fuel oil and asphalt was on plan due to well executed refinery operations.

Meanwhile, a total of 3,689 million standard cubic feet of Refinery Off Gas (ROG) was sent to Bahrain National Gas Company (Banagas). The total recovery of 1,102,378 barrels of propane, butane and naphtha was one of the highest since 2010.

Other operational improvements included the successful regeneration of the platformer catalyst, for the fifth time since the year 2000. Tighter monitoring and control of product blending with respect to product quality targets also resulted in an estimated gain of approximately $1.22 million.

SHUTDOWNS

Bapco successfully completed the 2016 HUB1 T&I (Low Sulphur Diesel Production complex, BLBOC Lube Base Oil unit, and associated crude oil, gas recovery and vacuum distillation units), which was the largest planned and executed maintenance event in the refinery’s 80-year history. The Bahrain Lube Base Oil Company, BLBOC is situated within the Bapco refinery, and is a joint venture between nogaholding and Bapco (combined 55 per cent equity) and Neste of Finland (45 per cent equity).

Twelve process units were shut down as part of the nine-week 2016 Hub1 T&I. At peak, more than 3,200 Bapco and contractor personnel were engaged every day cleaning, inspecting, repairing and testing some 400 major and 1,600 minor assets.

Among the critical jobs carried out were repairs to the transfer line of #2 Hydrogen Plant Reformer Heater, catalyst replacement and repairs to #1 Hydrocracker reactors, which is the main profit centre for the Refinery. More than 70 modification projects including an upgrade of Instrumentation and Control Systems, and the complete replacement of structured packing of #6VDU Column were also successfully completed.

More than 18 months of preparation, and excellent co-operation between maintenance, refining, engineering, procurement, security and other support departments , and with a single-minded relentless focus on executing the work while implementing several health and safety initiatives, resulted in delivering 1.42 million man-hours without any lost time or non-lost time injury. In addition, no leaks were recorded during start up on the more than 7,000 flange joints worked on during the T&I.

To maintain critical asset integrity and ensure units perform reliably with high availability, in addition to HUB1 T&I, Bapco successfully completed scheduled annual maintenance on several other process units, including:

• Platformer and Unifiner for Catalyst Regeneration and Gas Turbine inspection.

• Fluid Catalytic Cracker (FCCU) for inspection of cyclones

Seventeen tanks were returned to service following T&I, while approximately 4,500 feet of 10-inch Khuff Gas pipeline was re-routed from the Alba Distribution Point to the Refinery.

AUDITS AND AWARDS

Bapco was awarded a rating of five stars by the British Safety Council in the management of Health & Safety following a successful British Safety Council Five Star Occupational Health and Safety Audit in June.

Bapco Refinery Laboratory achieved a score of 95 per cent (Excellent Rating) in the Product Quality Testing Audit on Gasoline Testing, conducted by Chevron during the fourth quarter. This placed the Bapco Laboratory as one of the best in the network.

UPSTREAM INITIATIVES

As part of overseeing the kingdom’s upstream exploration activities, the government’s investment interests in Tatweer Petroleum were supported throughout the year. Bapco also spearheaded a number of onshore and onshore activities in 2016 which hold considerable potential.

Bapco concluded a contract with Al Mansoori Oil Services Company, to jointly conduct full flow tests for three onshore exploration wells. A new onshore exploration well drilling operations began in November.

A Turnkey Integrated Drilling Services agreement was concluded with Schlumberger for the drilling and testing of two offshore exploratory wells. Bapco also negotiated and secured a jack up offshore rig from Shelf Drilling for the drilling operations, which are due to commence early in 2017.

As part of a new offshore Exploration Licensing Round on behalf of the Bahrain government, Bapco opened its data room for Geo-Technical data review and evaluation. These efforts resulted in the signing of a Joint Study Agreement for two relinquished offshore blocks with the Italian Oil Major, Eni. Bapco has started to participate in the promotional road show events to sign the JSA with more IOCs in order to enter in the bidding for EPSA.

DEEP GAS

A select group of international oil and major service companies with recognised world-class experience in producing tight deep gas were invited to participate in a Technical Evaluation Study to assess prospects in the onshore Bahrain deep gas block.

A Technical Evaluation Agreement (TEA) was signed in the fourth quarter of 2016 with Eni, with plans to enter into additional similar TEAs during 2017

The TEAs are intended to assist Bapco to appraise and develop onshore deep gas discoveries which, if successful, will help meet increasing domestic natural gas demand.

An Airborne Gravity, Gradiometry & Magnetic Survey was conducted to acquire, process and interpret high resolution gravity and magnetic data across all onshore and offshore areas of the kingdom, in order to better assess the hydrocarbon potential of exploration blocks and identify priority areas for future exploration activity.

MAJOR GAS SUPPLIES

Bapco continued to provide uninterrupted natural gas supply to meet the growing demand by the power generating plants and industrial consumers in the Kingdom of Bahrain. The average quantity of gas delivered to the existing 36 gas customers in 2016 was approximately 1.4 billion standard cubic feet per day (bscfd). The annual Summer Coordination meeting with major gas consumers encouraged awareness of the need to optimise usage during the peak demand summer season in the best interests of the kingdom. This effort helped contain peak consumption to 1.8 bscfd in June 2016, which was 0.1 bscfd less than the previous year’s peak demand which occurred during August 2015.

PROFESSIONAL DEVELOPMENT

The highlight of Bapco’s 80-year journey has been its employees, both past and present. The company has a long and proud history of providing personal and professional growth opportunities to encourage employees to see themselves as part of a culture that values their professionalism and discipline.

In support of "Empowering Progress," getting employees ready and committed to run the different and larger company ahead of the expected BMP investment, Bapco enhanced and expanded the role of the Learning & Development Department during 2016. This team will assume overall responsibility for managing Bapco’s investment in its new Oil and Gas Academy, currently under construction at the site of the former school in Awali.

A key objective is for the Oil and Gas Academy to be recognised as a dynamic, performance-oriented centre of excellence for world-class leadership and technical learning, led by a committed team of trusted business partners.

Development began on many initiatives during the year , including the redesign of individual development plans; the creation of tailored programmes to fulfil specific strategic requirements for the company; the development of operator training manuals; the promotion of knowledge sharing throughout the organisation; and coaching, mentoring and public speaking programmes. The first of a series of presentations to widen employees’ knowledge and perspectives on global issues and leadership was held during December.

TRAINING

Ongoing targeted and tailored training programmes took place throughout the organisation during 2016.