The Bahrain Petroleum Company (BAPCO) is honing its business for the rapidly changing global marketplace. Deputy CE Eion Turnbull tells Gay Sutton why the company has a reputation for being a powerhouse of talent.
Images of Bahrain are televised around the world each year as the Formula 1 Grand Prix season kicks off at the spectacular Bahrain International Circuit at Sakhir, located among verdant greenery in the otherwise dusty arid interior of the island. Although Bahrain has only hosted the race for seven years, it seems very much at home in this Kingdom as it too, races to further make its mark on the rapidly evolving global stage.
This land of date palms and fresh water springs, with a rich cultural heritage that can be traced back many thousands of years, is the cradle of the Arabian Gulf oil industry. A small island lying between Saudi Arabia and Qatar, Bahrain was the first country in the Gulf region to discover and harness the rich oil reserves that lie beneath the earth’s surface.
In 1929, SOCAL (now known as Chevron), set up the Bahrain Petroleum Company (BAPCO), and made the first discovery of oil in 1932. That event then paved the way for exploration in countries such as Saudi Arabia, Kuwait and the United Arab Emirates, leading to the industry we know today.
With operations across a wide spectrum of disciplines, from exploration, drilling and refining through to storage and wharfing facilities, and with 16 retail outlets on the island, BAPCO today is 100 per cent owned by the government of Bahrain. “So we are essentially a national oil company,” explains the DCE, Eion Turnbull.
Output from the Bahrain oil fields is around 32,000 barrels a day, while the refinery processes about 267,000 barrels a day of crude. From this, 35 per cent is converted into diesel, manufactured to the highest global standards of quality, 20 per cent is kerosene—jet fuel, 20 per cent is black products (fuel oil or asphalt) and 15 per cent naphtha, with a small amount of gasoline also produced, predominantly for the local market. “As you can see, the refinery product slate is skewed towards middle distillates, being diesel and jet,” Turnbull says. “And we see this as a real strength because all forecasters are predicting that demand for them will grow strongly whereas the same is not true for gasoline. That we are in this position is testimony to the wisdom of investment decisions made during the past decade.”
Having invested $1.1 million increasing the refinery’s processing capability over this period, BAPCO is now looking to the future to secure its growth and enhance performance in what is a rapidly changing world. “This is being done under the banner of what we call our refinery master plan, which will define how the refinery will need to look post-2015.”
Elements of this plan include analysing the economic market, projecting what the quality requirements are likely to be after 2015, as well as environmental standards and community expectations. Based on these projections, something in the region of $2 billion to $4 billion is likely to be invested to upgrade the refinery, to improve its energy efficiency, and reengineer the product mix to reduce production of lower value or loss making products such as fuel oil and increase the production of higher value growth products such diesel and kerosene.
In parallel with this, the company also aims to diversify into other areas of the oil market and is engaged in researching and analysing the marketplace to identify trends and establish further opportunities. Its strategy for achieving this is to utilise its core strengths, which include project execution and operational excellence, and to find joint venture partners with expertise in complementary areas such as marketing.
“We are currently building a lube base oil plant,” Turnbull says. “And we are doing this in partnership with Neste, whereby we will operate the facility and produce the lube oil, and Neste will market it on behalf of the joint venture.” Once up and running, the plant should produce 400,000 tonnes of high grade, group III lube oil a year.
Environmental issues are a major concern to the oil industry in general, and BAPCO has always striven to position itself ahead of the game. Last year it commissioned a new refinery gas desulphurisation plant costing some $160 million. “And this was all about environmental improvement. It has minimal payback in terms of profits, and goes way beyond the government’s environmental requirements.”
In early 2012 a new wastewater treatment plant incorporating the latest technology is due to come online, and this has presented quite a challenge. “In this case, getting the technology right was very important for us,” he explains. The conditions in Bahrain are very demanding. There are high salt levels in the effluent, the quality regulations are stringent and the climate is very hot. “Which is why we built a pilot plant and tested it rigorously over a 12 month period, to ensure that we got it right.”
Looking to the future, the government of Bahrain is at the start of a major exploration programme to more than triple oil production from the Bahrain oil fields, and to identify further natural gas reserves. “I would think that over the next 10 years or so, this investment would come to something in the region of $20 billion.”
BAPCO’s role will be to oversee the technical aspect of the work on the Government’s behalf, to ensure that it achieves value for money, that the right balance of long- and short-term goals is struck and that the work is done to high technical specifications. Already, a joint venture called Tatweer is actively developing the onshore oil reserves. Offshore reserves are to be developed by joint ventures with PTT of Thailand and Oxy of the USA. And finally, joint venture partners are being sought to search deeper into the earth’s crust for further reserves of gas.
Having operated in Bahrain for some 82 years, BAPCO has developed a reputation for business best practice, always seeking win-win outcomes and social integrity. It was, for example, the first company outside of North America to win the prestigious Robert Campbell Award from the National Safety Council of America. It undertakes all the usual charity and public outreach activities, and also plays a key role in developing the island’s future leaders.
Each year the company selects 15 or 16 talented students and sponsors them through university at home and abroad, taking an interest in disciplines ranging from chemical and mechanical engineering through to accountancy, geology and physics. Some of the graduates continue with BAPCO, and others step into fast track careers in other organisations on the island. “As a result, BAPCO is seen as a powerhouse of talent,” Turnbull says.
“I think, if you had to sum up BAPCO, it’s an organisation that people like to deal with. We tend to be mindful of people’s needs, whether it’s a customer, a supplier, or a stakeholder. As a result, we’ll take a firm but fair approach. And people like that,” he concludes.
