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Bahrain's Bapco Starts Talks with Contractors on Sitra Expansion Bids

Source: Reuters 4/3/2017, Location: Middle East

State-run Bahrain Petroleum Co (Bapco) has started two weeks of negotiations with international contractors to clarify bids to expand the Sitra oil refinery, estimated to cost around $5 billion.

"The negotiations will last at least two weeks and hopefully the award will take place in a month or so," said a source familiar with the matter.

Bapco declined to comment.

Bahrain relies on output from the Abu Safa oil field that it shares with Saudi Arabia for the vast majority of its oil. A new pipeline will replace an ageing 230,000 barrel-per-day (bpd) link and enable the country to expand the processing capacity of the 267,000 bpd Sitra refinery.

Under the Bapco Modernisation Program (BMP), Sitra's capacity will hit 360,000 bpd by adding and replacing a few units. Four consortia made up of international engineering firms submitted bids in December.

These include Japan's JGC Corp and South Korea's GS; Technip, Tecnicas Reunidas and Samsung Engineering; Fluor, Hyundai Engineering and Construction and Daewoo E&C; CB&I, Petrofac and Japan's Mitsui and Co.

Project financing is expected to take place in the third quarter of this year, said a Bahrain-based investment banker familiar with the matter.

BNP Paribas and HSBC are advising the company on the project financing, which is expected to have an 18-year maturity including a four-year construction period. Late last year, a banking source said the financing could be finalised as early as the first half of 2017.

Wholly owned by the government of Bahrain, Bapco’s operations are in the refining, distribution, sale and export of crude oil and refined products.

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