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INTERVIEW: Bahrain to upgrade Sitra refinery by 2024, target new crude feedstock

Highlights

Refinery to process heavier crudes after upgrade

Currently processes Arab Light, Arab Medium and Bahrain crude

Expansion to boost capacity to 380,000 b/d

Bahrain is planning for a 2024 startup for an upgraded and expanded Sitra refinery that will allow its sole processing facility to handle new crudes, including heavier grades, as it seeks to monetize the lower end of the barrel, an official told S&P Global Platts Nov. 30.

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The startup of the $7 billion upgrade and expansion of Sitra has been pushed back to 2024 due to labor shortage resulting from COVID-19 delays, Mark Thomas, the CEO of state-owned energy company Nogaholding said in an interview.

The expansion will increase Sitra's processing capacity to about 370,000-380,000 b/d from 270,000-280,000 b/d, Thomas said.

"It is a significant upgrade in terms of throughput but more importantly it gives us flexibility to be able to take a variety of crudes not just nice light Arab Medium and Arab Light crude, but we can also take heavier crudes," he said.

"With all the processing, it basically gives us a better product cut on that back end of the refinery."

The refinery currently processes domestic Bahrain crude and Arab Light and Arab Medium that are piped from Saudi Arabia, which shares the offshore Abu Safah field with Bahrain.

Arab Light and Arab Medium are "a very nice crude to work with but it is also a premium crude", Thomas said.

"We would be looking at, after the refinery upgrade, where we might be able to secure cargoes of feed that would be a lower price for us, less desirable, but we have the configuration in the refinery."

Heavier crudes

Nogaholding expects potential new crudes from an offshore oil discovery to be of the heavier grade, which would help boost the refinery's feedstock.

The island nation in the Persian Gulf made waves in 2018 when it first revealed the extensive Khalij al-Bahrain reservoir off its west coast, which it said could contain some 80 billion barrels of tight oil -- its largest oil discovery since the 1930s.

Nogaholding has drilled two wells in the field and is currently evaluating the geo-seismic data, but does not expect development to take place before 2025.

"We see some of our unconventionals being heavier crudes," Thomas said. "We got some potential onshore for some heavier crudes."

Nogaholding is mainly targeting export markets for the refinery products, given the small domestic consumption in the Gulf's smallest oil producer and economy.

"The middle distillates is where we think the market is going to be the most attractive for us because of course the whole point of expanding the refinery capacity it to tap into the export markets," Thomas said.

"Naphtha could be used for petrochemical projects. We have not made that decision yet, but we are certainly looking at it. That would be a logical thing to take the naphtha and take it forward into an aromatics project."

A potential petrochemical project would allow Nogaholding to produce grey hydrogen, which could help its access wider export markets.

"The interesting thing in an aromatics unit, if we were to go ahead, it produces about 100,000 tons per year of hydrogen," Thomas said.

"That gives us some new possibilities to look at hydrogen."

The refinery upgrade will also help Nogaholding lower its Scope 3 emissions, since most of the products will be exported, Thomas said.

"One of the reasons to do the refinery upgrade is to produce higher quality products with a lower carbon footprint," he said.

"Then the products that our customers are buying from us will have a lower carbon footprint."