OGN: Please give an update on the status of the merger between Bapco and Banoco. What was the thinking behind the merger and do you think initial objectives have been met?
Great strides were made last year in the process to finalise the merger between former Bapco and former Banoco.
Last year the entire management and all employees joined in the effort to lay a solid foundation for the new Company.
Strategic Planning: During the year, Bapco's Strategic Planning Council completed the formulation of the strategic business direction and strategies for the newly-merged Company, which includes Bapco's new Purpose, Mission, Vision, Values and Business Success Criteria. Long-term goals and targets were also specified.
BSC Performance Management: A framework has been developed to describe and communicate the strategy of the new Company to all levels of the business, using Balance Scorecard (BSC) performance indicators. Users have been trained in the use of BSC reports.
SCP implementation: Following a detailed review and benchmarking process, the Supply Chain Planning team started a controlled pilot in November 2001, with the aim of improving, redesigning and, in some areas, reengineering the existing SCP work processes to maximise synergy between the Marketing and Refining planning functions.
Job Evaluation: Late last year, management participated in a familiarisation programme in preparation for the introduction of an internationally-recognised job evaluation system later this year.
This year will see implementation and consolidation of what we have been working on for the past several years.
OGN: Bapco is in the midst of a major investment to upgrade its facilities. How important do you think this project has been and why?
This is the greatest ever upgrade project at the refinery, which was established more than 60 years ago. The total cost of the upgrade projects amounts to about $952 million. The net result of the upgrade projects combined is an anticipated additional annual revenue of more than $118 million.
The refinery upgrade, as approved by the Supreme Oil Council (headed by His Highness the Prime Minister and president of the Council) almost four years ago, involves an integrated collection of interlinked projects whose implementation started in 2000 and are slated for completion by 2005.
The aim of these projects is to upgrade the complexity and technological capabilities of the refining processes to enable Bapco to focus on environmentally-friendly finished petroleum products capable of competing on the international markets. Of the upgrade projects, the following two were inaugurated last year:
1. GCU compressors: The new $20.5 million wet gas compressor project of the refinery's gas concentration unit was inaugurated on July 8.
Previously, Bapco had eight alternate gas compression units operating since 1944. These compressors were obsolete and required major maintenance to enable them to operate as required. This made it imperative to replace them with a single new, and highly advanced, centrifugal gas turbine compressor. Besides the maintenance savings, the new compressor is designed to enhance the operating efficiency of the Fluid Catalytic Cracking unit. The compressor's cost recovery period is estimated at 3.7 years from the start of operations, calculated on the basis of a unit capacity of 41,000 barrels per day (bpd) and operating at a conversion of 55 per cent of the feed volume.
2. Kerosene Merox: This $29.5 million project was inaugurated on November 25 and was implemented by JGC Corporation of Japan. The project, which was started in April 2000, processes 50,000 bpd of kerosene using state-of-the-art environmentally-friendly technology. Previously, all jet fuel produced by Bapco used to be processed using an obsolete lead sulphide method inconsistent with the modern trends of environmental protection.
OGN: Please give details of the recent accord you signed with Qatar and ExxonMobil for the supply of gas to Bahrain. Do you think there is scope for additional gas supply agreements with regional suppliers?
Abdulla bin Hamad Al Attiyah, the Qatari Minister of Energy and Industry, headed an official delegation on a visit to Bahrain on September 10 and 11 last year, in which discussion focused on the possibility of supplying Bahrain with Qatari gas.
The following agreement was reached:
A memorandum of understanding was signed in Doha on January 8 this year between the Ministry of Oil in Bahrain, Qatar's Ministry of Energy and Industry and ExxonMobil Middle East Gas Marketing Ltd (a sister company of ExxonMobil).
The main advantage to Bahrain is securing a reliable source of clean fuel which will meet future energy requirements for industrial development, power generation etc. Bahrain's close geographical proximity to Qatar also favours securing gas at lower costs than from other countries.
OGN: Bahrain is established as a hub for companies servicing the Gulf's oil and gas industries. What are Bahrain's key attributes in attracting these companies?
Bahrain's strategic location in the Gulf and its link to Saudi Arabia by the King Fahd Causeway are key factors. Also, Bahrain is one of the most economically-free countries in the world, with a reputation for offering very attractive opportunities for local and international investors.
There is also an abundant supply of highly educated labour, a great tradition of tolerance and understanding of the modern way and an efficient banking and communication system without taxation and exchange control, making Bahrain the unparalleled destination for any investor.
OGN: Bahrain has signed exploration deals and also invited bids from leading international oil companies to enhance oil and gas reserves and production. Please provide an update on these developments.
In response to the invitation to international oil companies by His Majesty the King Shaikh Hamad bin Isa Al Khalifa, to explore for oil and gas in Bahrain's territorial waters, a number of major international oil companies were invited to submit their proposals for oil and gas exploration in the Eastern offshore area (extending from Jaradah in the North to Hawar Islands in the South).
The following international oil companies were pre-qualified to review the available information on the area and submit their proposals: Texaco, Conoco, Talisman, Alberta, Chevron, Occidental, ExxonMobil, TotalFinaElf, Petronas Carigali and Maersk.
An international consultative company was retained to review and evaluate the technical, financial and legal aspects of the proposals made by these companies and the final report was submitted to the Supreme Oil Council.
The Council of Ministers approved the bids submitted by Petronas and Texaco on September 23 last year and directed the Minister of Oil to follow up on the procedures with these two companies, to proceed with exploration work in the designated blocks.
OGN: How significant is the presence of Petronas to the strategic development of Bahrain's oil and gas reserves?
An Agreement of Exploration and Production was signed between Bahrain and Petronas on November 1 last year during a visit to Malaysia by the Prime Minister Shaikh Khalifa bin Salman Al Khalifa.
The agreement covers Fasht Al Adhm and the southeastern offshore area, known as Blocks 4 and 6 according to the geographical distribution of the areas offered for prospection.
OGN: How is Bahrain addressing the development of the Hawar Islands in terms of appraising potential oil and gas reserves while protecting the environment of the area?
Environmental impact studies are being looked into in conjunction with the Ministry of Municipality and Environment to better protect its environment.
OGN: Human resource development has been a cornerstone of the growth of Bahrain's petroleum sector. What steps are being put in place to develop the next generation of high calibre nationals for technical and management positions in the oil, gas and petrochemical industries?
Human resource development has always been a part of both Bapco and GPIC's strategies, and they are pressing ahead with ambitious human resource management programmes to ensure that the skills of the workforce match technological and business demands.
Young employees have been sent for higher education abroad. Training is offered on all levels with members of staff continuously involved in training courses.
