Bahrain Review

Shaikh Mohamed ... making Bapco ‘future-proof’

Shaikh Mohamed ... making Bapco ‘future-proof’

nogaholding looking to build petrochemical complex

The main focus for nogaholding in 2016 will be the BMP even as the company has also started looking at financing some of the projects it had begun already, says SHAIKH MOHAMED BIN KHALIFA BIN AHMED AL KHALIFA, chief executive, nogaholding

Bahrain’s Oil and Gas Holding Company (nogaholding), the investment and development arm of the National Oil and Gas Authority (Noga), plans to set up a modern petrochemical complex in the kingdom.

"We are currently in discussions with one of the national oil companies in the region to set up the joint venture petrochemical complex capable of producing olefins (including ethylene and propylene) and aromatics (including benzene, toluene and xylene isomers)," says Shaikh Mohamed, chief executive, nogaholding.

nogaholding is in the process of setting up a company for the project, which is in the design phase now, he tells OGN in an interview.

Olefins and aromatics are the building-blocks for a wide range of materials such as solvents, detergents, and adhesives. Olefins are the basis for polymers and oligomers used in plastics, resins, fibres, elastomers, lubricants and gels.

"We are in continuous consultation to develop our downstream business. Aromatics fits in well with refining and it opens up the downstream opportunities. With an aromatics plant, we will also save considerable amount of gas at the Refinery," says Shaikh Mohamed, an MBA from DePaul University, Kellstadt Graduate School of Business.

At the helm of affairs at nogaholding, Shaikh Mohamed had earlier graduated with honours from the King Fahd University of Petroleum and Minerals with a BSc degree in Electronics.

He completed his higher education in the UK with a postgraduate diploma from the University of Cambridge and an Advanced Masters from the Imperial College of Science, Technology and Medicine.

Largely instrumental for the aggressive pro-business strategy of nogaholding, Shaikh Mohamed feels that it was high time that Bahrain had a world-class petrochemical complex.

The main focus for nogaholding in 2016 will be the Bapco Modernisation Programme (BMP) even as the company has also started looking at financing some of the projects it has begun already.

The BMP is a great way of making Bapco "future-proof", he says. "By investing in it we upgrade the technology and make new products fit for a market which is looking for higher spec refined products that meet the latest environment and emission standards," says Shaikh Mohamed, who is also the chairman of Bapco.

One of the key objectives of the BMP is to improve the product slate by upgrading the refinery residue, thereby improving gross margins and remaining competitive under a wider range of feedstock and product prices, and market conditions.

Shaikh Mohamed says that the BMP has come at the right time when the market is depressed and there is intense competition among contractors to grab projects.

"We have seen price competitiveness in the Feed and PMC bidding. Now we see it being reflected in the contractor and supplier market. Although the falling oil prices had its own ramifications on the industrial sector, it was good for the refinery whose margins went up.

"Therefore it was a great year for Bapco, but other companies have been hit by the general slump brought about by the oil price crash. On the whole, the low oil price did not have a good effect on our companies. But we remain positive," he says.

Talking about other businesses, Shaikh Mohamed says: "We have reclaimed some industrial land next to Bapco, which is a project nearing completion. We now have a land bank where we can set up new projects."

Bapco ... making the refinery modern and competitive

Among nogaholding’s achievements in 2015 were the signing of project agreements for the development of an LNG receiving and regasification terminal in the kingdom with a consortium of Canada’s Teekay LNG Partners (Teekay LNG), South Korea’s Samsung C&T (Samsung) and the Gulf Investment Cooperation (GIC). Another milestone is the signing of contracts between Saudi Arabia and Bahrain worth around $300 million to lay a new 350,000-barrel per day (bpd) oil pipeline between the two countries, with the link due to be operational in 2018. 3rd Milestone is the Banagas Expansion project, the agreements signed include engineering, procurement and construction (EPC) for a $355 million worth gas plant, he says.

The LNG project will comprise a floating storage unit (FSU), an offshore LNG receiving jetty and breakwater, an adjacent regasification platform, subsea gas pipelines from the platform to shore, an onshore gas receiving facility, and an onshore nitrogen production facility.

The LNG terminal will be owned and operated by Bahrain LNG WLL, a new joint venture owned 30 per cent by nogaholding and 70 per cent by the consortium of Teekay LNG, Samsung and the GIC.

"We are doing the design and build directly for Banagas without going into the Feed process. We have asked the contractors to come with a design and they have done the design of the full project, which saved us time and money, and the award was given to the Japanese company JGC Corporation, which won it facing strong competition from Technip and CB&I," he says.

Meanwhile, the $350 million sharia-compliant loan sought by nogaholding is for financing the A-B pipeline project. The new pipeline will replace an ageing 230,000 bpd link and enable Bapco expand the processing capacity of its 267,000 bpd Sitra refinery.

Tatweer Petroleum, a joint venture of three strategic partners -- nogaholding, US-based Occidental Petroleum and Abu-Dhabi-based Mubadala Petroleum – has been a pioneering EOR project that has proved successful, he says.

Tatweer focuses on applying EOR techniques in the Bahrain field and is at the very forefront of the industry in thermal recovery of both heavy and light oils from carbonate structures.

"During the past year we have also been busy arranging finance for the ongoing projects. Complex industrial projects do not happen in a year or two. For Bapco it took four years to select the right design for the BMP," he explains.

nogaholding is also in collaboration with the Economic Development Board of Bahrain helping companies in the oil and gas sector to develop.

"We have a small initiative with the EDB to facilitate companies who want to set up base in Bahrain," he adds.

Referring to project financing, he says: "For the financing of the projects we should make sure we raise capital from the debt market. We also want to involve the stock exchange at some point."

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