Bahrain Energising the Future

Dr Nassif ... Bapco is on the cusp of major changes

Dr Nassif ... Bapco is on the cusp of major changes

Post-BMP Bapco to double earnings, says Chairman

Bapco’s product slate will better match global market demand, and new world-class assets at the refinery will help deliver more energy efficiency and output, says DR DAWOOD NASSIF, Chairman of Bapco, in an exclusive interview with OGN

The multi-billion-dollar investment on Bapco’s Modernisation Programme (BMP) will contribute to the long-term economic sustainability of Bahrain by transforming Bapco into one of the most competitive and environmentally compliant refineries.

When completed in 2022, the company will effectively double its earnings potential through a 43 per cent increase in its capacity, its product slate will better match global market demand, and new world-class assets at the refinery will help deliver more energy efficiency and output, says Dr Dawood Nassif, Chairman of Bapco, in an exclusive interview with OGN.

'Assets, of course, are only part of the story. Bapco is also transforming its workforce and business processes through important reliability, automation, commercial and human resource initiatives,' he says.

Once the BMP is fully commissioned, Bapco’s commercial business will generate twice the current revenues and more than twice the profit potential of Bapco’s current state, he explains.

This requires modernising and enhancing of the sales and marketing business process and complementing it with appropriate technological solutions. Bapco plans to implement a Commodity Trading and Risk Management (CTRM) system as part of a strategic commercialisation objective endorsed by Bapco’s Management and its Board of Directors, in order to be ready to manage a post-BMP world more effectively.

On the progress of BMP, he says Bapco is approaching the end of the detailed design activities that have taken place across three Operating Centres in Rome, Madrid and Seoul, providing the foundation for the implementation of BMP through the specification of all equipment and bulk materials required, and provision of all purchase orders and approval of construction drawings.

Bapco is also transforming its workforce

By the end of August 2019, 60 per cent model reviews of all major process units were completed. At this time, major process engineering decisions have all been taken, contractors’ Process and Instrumentation Drawings (P&ID’s) reviewed, and HAZOP reviews completed and implemented.

A smaller team will remain in place at the Operating Centres until the end of the year to complete the next major engineering milestone: the 90 per cent Model Review. This involves the addition of all small-bore piping, electrical, and instrumentation items.

Meanwhile onsite in Bahrain, structural piling is almost complete. To illustrate the significance of some of the onsite activities, on August 29, 2019, concrete pouring was carried out for foundation works of a new unit feed tank. Approximately 2,000 cu m of concrete was successfully poured and supplied by 242 concrete mixers, in a process that took 10 hours, he says.

Excerpts from the interview:

What were the highlights of Bapco’s performance in 2019?

The highlights of Bapco’s year-to-date performance reflect the company’s ongoing commitment to maintaining safe and reliable operations. One million Bapco and Contractors’ employee hours without a Lost Time Injury (LTI) were achieved on Thursday, August 8, 2019, with in excess of 2 million workforce hours recorded. The ongoing trend of improvement in refinery reliability and operational availability has enabled the company to deliver sustained throughputs consistent with its volume targets.

What contributions did Bapco make to the national economy of Bahrain during the year?

BMP in progress

Year 2019 marks 90 years of Bapco making sustained commercial and economic contributions to the development of Bahrain. Bapco is the primary generator of foreign earnings for the kingdom, via export to international markets of the refinery’s production of refined products, and the sale of crude oil (on behalf of the government) from Bahrain’s share of the offshore Abu Safah oilfield.

The Bapco Modernisation Programme (BMP) is the largest and most significant investment in the refinery’s history. Wherever possible, contracts are awarded preferentially to local companies that have the necessary credentials to deliver world-class performance on mega projects such as BMP. Bapco has also added more than 500 new staff during the past three years, including experienced professionals from multiple disciplines who have successfully delivered similar transformative projects. Whilst the clear majority of employees are Bahraini, there are now over 42 nationalities working at Bapco, which has a positive ripple effect on the national economy in sectors including housing, schooling and other services required. In addition to the company’s extensive training and development programmes, unprecedented opportunities exist for skills and knowledge transfer through on-the-job interaction with multi-national professionals.

More strategically, four national programmes are under way to train Bahraini high school graduates interested in possible technical careers at Bapco. The third Area Outside Operator intake is currently in progress, and Bapco will have 120 assessed high-calibre Bahraini nationals employed in this rigorous apprentice qualification programme at the Bapco Oil & Gas Academy by October 2019.

Bapco also continues to be a leading sponsor of education, industry events held in Bahrain, and national events such as the Grand Prix and bi-annual Bahrain International Air Show, amongst others.

Sponsorship of some of the kingdom’s largest events in the social and sporting calendar has helped promote Bahrain on the world stage and cemented Bapco as a pillar in our nation’s community.

What are the projects planned by Bapco for 2020?

Aside from the BMP, projects in 2020 focus on completing multi-year transformative initiatives and critical engineering and environmental projects that will enable Bapco to take full advantage of the BMP investment. Examples of engineering projects slated for completion during the second quarter of 2020 include improving the Seawater Intake Filtration System by replacing the existing maintenance-prone travelling band screens at the High Lift Pump House, and the upgrading of the existing No.3 API separators to be compliant with environmental health and safety regulations with respect to gaseous emissions, release of volatile organic compounds and hydrogen sulphide to atmosphere. Bapco is currently working with the Arabian Gulf University (AGU) to conduct joint research into bioremediation of oily waste sludge, with the project due to commence by the end of 2019.

What are the tangible benefits to Bapco from the ambitious BMP?

The multi-billion-dollar BMP investment will contribute to the long-term economic sustainability of the kingdom by transforming Bapco into one of the most competitive and environmentally compliant refineries. When completed, the company will effectively double its earnings potential through a 43 per cent increase in its capacity, its product slate will better match global market demand, and new world-class assets at the refinery will help deliver more energy efficiency and output. Assets of course are only part of the story. Bapco is also transforming its workforce and business processes through important reliability, automation, commercial and human resource initiatives.

On the drilling side, what progress has been made at the Bahrain Field and the Khaleej Al Bahrain basin? When can we expect production of the newly discovered oil and gas?

Regarding the progress of the Bahrain Field, Tatweer Petroleum has initiated a number of geological and engineering studies following the announcement of the discovery of the pre-Unayzah gas reservoirs in 2018, in order to set up a notional development plan for two reservoirs. Simultaneously, we launched a dataroom for the pre-Unayzah gas opportunity where interested International Oil Companies (IOCs) can view and evaluate the recent discovery. In addition, Tatweer Petroleum is planning to drill the first pre-Unayzah appraisal well to achieve an initial production in 2020.

In relation to Khaleej Al Bahrain Basin (KAB), Tatweer Petroleum has launched an appraisal campaign after the discovery of the unconventional reserves in KAB, announced in April 2018, aiming to delineate the resources extent and gather sufficient geological and production data to get a better understanding of such resource and to attract potential operating partners and investors.

In 2019, we drilled and fracked a test well targeting these resources (the testing phase of this well has started and will be under evaluation for approximately six (6) months). The testing results of this well will be used, once available, to update the current understanding of the basin and provide crucial input for the planned initial development plan. In addition, we continue to engage major International Oil Companies (IOCs) through conducting datarooms and workshops. The appraisal and promotional campaigns are scheduled to continue through 2020 as Tatweer Petroleum plans to drill a number of additional test appraisal wells to meet the projected start of the initial development plan in 2022.

How has the volatile oil price environment affected Bapco’s business this year and what is your projection for the next year?

Refinery margins have generally been under pressure due to new refining capacity outpacing demand growth since 2018, especially in East of Suez markets. Rising feedstock costs coupled with increasing concerns about an apparent softening of the global economy and accompanying demand reductions have exerted further downward pressure on refining margins this year. As we progress towards the end of the year and into 2020, the consensus amongst leading industry analysts is that the trend of strengthening middle distillate cracks will continue. This is in response to a tightening of the global gasoil market caused by the 1 January 2020 implementation of the International Maritime Organization (IMO) sulphur cap regulation for bunker fuels. Since Bapco is a middle distillate-oriented refinery, this projection bodes well for our business during the coming months.

Are Bapco’s margins holding? How has it been for Bapco in terms of stable, reliable operations?

To date reliable operations and astute marketing have enabled the company to maintain robust cash generating capacity in the toughest of margin environments.

How much crude oil did you run in 2019 and how is it compared to previous years? How did your earnings perform in 2019?

As of September 26, 2019, the year to date crude run is ahead of budget, comparing favourably with previous years. Operating costs are also under control, supporting earnings that are consistent with the company’s budget expectations.

Bapco ... focus on completing multi-year transformative initiatives

On the environmental front, what are some of Bapco’s plans and achievements?

Bapco has a long legacy of recognising the importance of sustainable development and corporate social responsibility. Sound environmental management is an integral part of both the company’s Environmental, Health and Safety (EHS) policy and Key Performance Indicators. Since year 2000, more than $320 million has been invested in the best available technology (without direct economic return) to ensure compliance with local regulations and international standards for land, air and water.

Bapco’s environmental initiatives and programmes target both internal and external stakeholders. The educational ‘Green School Awards Scheme’ launched in 2005, encourages the next generation to innovate environmental solutions that can be implemented in their schools or community. A continuous ‘Waste Segregation and Recycling Programme’ was launched at company operations in February 2017, aimed at reducing the amount of office waste going to landfill on a daily basis. This not only reduces greenhouse gases and other pollutants that result from landfill, but also conserves resources and supports cost saving. The employee awareness and behavioural changes associated with recycling extend to their families and the community at large.

The BMP is designed to meet and exceed local and international regulations on environmental footprints, and more than 50 environmental and social studies and plans have already been completed. In addition to improving the refinery’s Energy Efficient Index by almost a third, the BMP will improve air quality by reducing sulphur dioxide (SO2) and Nitrous Oxide (NOx) emissions by 50 per cent and 5 per cent respectively even though refinery throughput increases by some 43 per cent. There will also be a 9 per cent reduction of volumes of treated wastewater discharged to the sea. The project will rehabilitate the soil and improve its quality, support biodiversity through further plantation of mangroves (a programme started in 2018) and ensure limited noise impact during both construction and operation phases.

What are Bapco’s achievements on the safety front? Have you set any targets for 2019?

Keeping our people and assets reliable and safe underpins everything we do at Bapco. Health and Safety has been and will always be essential in our operation and together with Reliability, sustains the company’s license to operate. BMP achieved 5 million employee hours without a Lost Time Injury (LTI) for the entire BMP team in Bahrain and overseas early September 2019. Meanwhile, Bapco overall is inching towards achieving the next milestone of 3 million hours without a LTI. Our focus remains on maintaining an incident and injury free place of work by cultivating a sense of vulnerability, especially when performing the most routine tasks, and in the community at large through our various Environmental, Health and Safety Committees (EHSC) initiatives, Bapco’s Wellbeing programme, and others.

With the challenging security situation in the region, what steps Bapco is taking to ensure its facilities are safe?

In addition to various security measures undertaken in conjunction with external government agencies, Bapco also has a fully activated and tested Crisis and Emergency Response Plan (CERP) in place. The plan centralises crisis control, offers logistical support for all involved, and provides an internationally-recognised organisational structure for sustaining the business during and after a significant event.

More Stories