$431.6m contract for low-sulphur diesel; project to benefit economy
The Bahrain Petroleum Company (Bapco) yesterday signed an agreement for the production of low sulphur diesel oil with the JGC Corporation of Japan.
The $431.6 million contract was signed on behalf of the Bahrain Government and Bapco by the Minister of Oil and Bapco Chairman, Shaikh Isa bin Ali Al Khalifa and by Shoji Morimoto, on behalf of the Japanese company, at the Ritz Carlton Bahrain Hotel and Spa.
The total value of the project is estimated at $685 million, with the rest of the business going to Bahrain contractors.
The ceremony was also attended by Ali Saleh Al Saleh, the Minister of Commerce, Abdulla Hassan Saif, Minister of Finance and National Economy, Dr A. Hussain bin Ali Mirza, Minister of State and Chairman of the Tenders Board; Mohammed Saleh Shaikh Ali, Bapco President and Managing Director and Kiyoshi Asako, Charge d’ Affairs of the Embassy of Japan as well as the Assistant Undersecretary for Oil Affairs in the Ministry of Oil, Shaikh Tariq bin Mohammed bin Mubarak Al Khalifa.
The contract strategy is based on maximising the use of local Bahraini contractors under JGC management. JGC will manage and execute the work in Yokohama, Japan, through an integrated task force consisting of a Bapco Project Team and a JGC Project Team, and subsequently through the construction sub-contractors at site.
Shaikh Isa expressed his pleasure at the execution of this project. “We are all very grateful for the foresight of our political leadership, whose guidance and directives were instrumental in this project coming to this stage.”
He said the Supreme Oil Council, headed by the Prime Minister, Shaikh Khalifa bin Salman Al Khalifa, approved this project in April 2000 and since then Bapco has proceeded expeditiously with it.
“The award of the contract to JGC was recommended by Bapco and approved by the Tenders Board based on lowest bid price, superior technical proposal and execution strategy, and an accept able schedule,” he said.
The project forms the main element of Bapco’s Strategic Investment Programme. “The primary objective of the project is to reduce the current high-sulphur content of the Bapco diesel pool from an average of 0.7 per cent (7000 ppm) down to 0.001 per cent (10 ppm) to ensure continued sales in the international diesel market.”
He said the project will also increase the yield of the more valuable refinery products bringing in incremental annual revenue of around $200 million, yielding a return on investment of around 22 per cent. “It will also provide the foundation for the implementation of yet more future profitable projects.”
The project will also bring benefits to the national economy through the creation of job opportunities and transfer of new technologies to the refinery.
“More than 100 Bahraini engineers, technicians and operators will participate in various phases of the project execution, and subsequently in operating and maintaining the facilities,” said Shaikh Isa.
He said that the Bahrain construction sector will benefit most during the construction phase and subsequently during the new facilities’ shutdown and maintenance activities. “Bapco’s project execution strategy emphasises on maximising participation of the local contractors in the construction phase. It is anticipated that about 30 per cent of the labour force during the construction phase will be provided from local Bahraini contractors working in association with the major international sub-contractor. This equates to about $40 million worth of work.”
A significant number of additional engineering and construction staff will have to be accommodated in Bahrain during the construction and commissioning phases of the project. This will enhance the social and economic activities in the country, particularly benefiting the hotel and housing sectors.
“The project will be one of the most complex projects undertaken in Bapco for many years,” he said. “The justification and the economics of the project reflect its importance as vital, enabling the contin ued operation of the refinery and future prosperity of Bapco as a major international export refinery.”
The detailed design is due to start in February 2004, with the commencement of on-site works in September 2004 and commissioning of the plants during first quarter 2007.
© Bahrain Tribune 2004
