Bahrain will be presented with a final decision on BAPCO’s expansion plans next year, a senior oil executive told Reuters.
Peter Bartlett, CEO of Bahrain Petroleum Co. (BAPCO), did not say whether or not it will go ahead with its plans for expansion, but added that a decision will be reached in 2016.
“We are in FEED (Front-End Engineering Design) right now, and we will be in that stage in 2015. We will present the kingdom with a plan to proceed or not with the final investment decision in 2016,” he said.
The proposed expansion would boost the capacity of the Sitra refinery from 267,000 bpd to 367,000 barrels per day (bpd), Bartlett said.
BAPCO had concluded term deals for a large part of its 2015 forward production at “pretty good margins,” according to the official.
However, Bartlett warned that a recent expansion in refining capacity in the Gulf might create a supply glut and add more pressure to product prices.
Saudi Arabia’s Satorp and Yasref refineries have been estimated to expand the Kingdom’s refining capacity by 800,000 bpd in 2015, while the UAE’s Ruwais refinery added more than 400,000 bpd of capacity last year.
Bartlett predicted oil product prices would weaken as crude prices continued to fall, echoing a similar sentiment from a number of Gulf traders.
“My expectation is that … if crude prices would decline in a more rapid way then the product prices would soften,” he said.
Bartlett also said that Bahrain’s decision to raise prices of natural gas sold to domestic companies from 1st of April was likely to be the beginning of a longer-term trend of easing subsidies.
