Bapco Bahrain

The Bahrain Petroleum Company (BAPCO) is an integrated petroleum company that is the national oil company of Bahrain.

It was founded in 1929 and discovered the first oil field in the Persian Gulf outside of Iran in 1932. Shipments of crude oil commenced in 1934 and in 1936 the first refinery in the Gulf outside of Iran was built. The founders were the American Standard Oil of California, which was soon joined by Texaco, operating under British rule. While Bahrain never was a high-volume crude oil producer, the American joint venture a few years later came into possession of the vast Saudi Arabian oil reserves, which are located on the mainland in the vicinity of Bahrain Island. Supplied from the mainland, the refinery though exceeded the capacity of the Bahrain oil field from its inception and was among the largest in the region.

Overview

BAPCO was established in 1929 in Canada by Standard Oil Company of California for oil exploration activities in Bahrain.

It took over Bahrain's assets of Gulf Oil. In 1930 it obtained the only oil concession in Bahrain.

BAPCO discovered first oil in 1931.

On 31 May 1932, the company discovered the Bahrain Field (Awali Field). After exporting oil and constructing a refinery, it started with refining capacity in 1936. Later that year the Standard Oil Company of California signed an agreement with Texaco, which acquired a half of BAPCO's shares.

In 1975 more than 60% BAPCO's shares was acquired by the Government of Bahrain. In 1980, all BAPCO's shares were taken over by the Government of Bahrain.

In 1978 the oil sector was nationalized and BAPCO assumed full control of the national energy sector. In 1999, the current Bahrain Petroleum Company was created when the Bahrain National Oil Company, established in 1976, merged with BAPCO. In 2018 BAPCO commissioned a new pipeline that replaced the over 70 years old pipeline infrastructure between Bahrain and Saudi Arabia. In March 2019 construction work was started to upgrade the main oil refinery Sitra. The $5 billion project will increase the capacity to . Abdulrahman Jawahery is CEO of the BAPCO.

In August 2021, BAPCO signed a five year agreement for catalyst management with Chevron Joint Venture for $240 million. The clean fuels group specialist Advanced Refining Technologies (ART) which is the joint venture of Chevron and W. R. Grace & Company, will supply there Resid Hyrdocracking catalyst technology for the new Resid Hydrocracking unit (1RHCU) that is to be operational by 2023.

In October 2021, BAPCO was released from the base oils joint venture with Neste and Nogaholding, ending the presence of Neste in Bahrain.

On 6 February 2022, BAPCO signed a Memorandum of Understanding (MoU) with Aluminium Bahrain B.S.C. (Alba) for the implementation of Environment, Social and Governance (ESG) initiatives.

In 2023, BAPCO became part of the BAPCO Energies brand together with Bahrain National Gas Company (Banagas), Bahrain National Gas Expansion Company (Tawseah), Bahrain Aviation Fueling Company (Bafco) Tatweer Petroleum, and Bapco Retail Company (Tazweed).

BAPCO is a founding company of the Gulf Downstream Association (GDA).

The Bapco Modernisation Programme (BMP) completed the construction of the main control building in July 2023 and celebrated with a ceremony, in which for the first time ever in the Middle East a three-dimensional model of the BMP was presented. The ceremony was attended by Nasser bin Hamad Al Khalifa, who was also given a tour of the facilities and briefed about further BMP project progress. The BMP was 90% complete by August 2023.

In July 2023, Bapco Energies launched its Sustainability Linked Finance Framework, which fits into Bahrain's sustainability and climate change commitments to reduce emissions by 30% by 2035 and a net zero by 2060. In accordance with Bahrain's new energy strategy, Bapco Energies B.S.C began additional developments in August 2023 to become an energy company with fossil fuel based renewable energies. The company aims to generate 20% of Bahrain's energy from renewable sources by 2035 and continues to seek investment opportunities in renewable energy projects and carbon reduction technologies.

In March 2024, BAPCO began a cooperation with TotalEnergies in order to optimize its Sitra refinery. A strategic partnership between the two companies, which began in July 2024, provides BAPCO with additional market opportunities and trading strategies, as well as access to TotalEnergies' networks.

Operations

BAPCO is an integrated oil company operating in the field of refining, and marketing. It operates a oil refinery which lies midway between the original BAPCO expat workers accommodation township of Awali and Sitra.

The complex also includes storage facilities for , a marketing terminal, and a marine terminal. 95% of the company's products are for exports. About one-sixth of this crude originates from the Bahrain Field, with the remainder being pumped from Saudi Arabia. Saudi Aramco supplies approximately through the pipeline from Aramco's Abqaiq Plant.

Once the flagship Sitra refinery's expansion is completed in 2023, its capacity will be increased from 267,000 bpd to 380,000 bpd.

History

On December 2, 1925 the British ''Eastern and General Syndicate'' (headed by Frank Holmes) acquired from the Sheik of Bahrain ( Isa bin Ali Al Khalifa) an oil concession (full text: ) over 100,000 acres with exclusive right to develop the area. Shortly thereafter the concession was extended to cover all of Bahrain. On November 30, 1927, the ''Eastern Gulf Oil Co.'' subsidiary of Gulf Oil bought an option on the concession, to be exercised before January 1, 1929. Gulf Oil was at the time a shareholder in the ''Near East Development Corporation'' which held a 23.75% stake in the Iraq Petroleum Company. Thus, Gulf Oil was bound by the Red Line Agreement, which stipulated that the company would not be allowed to exploit Bahrain oil without the involvement of the other members of IPC, or rather, if they did, they would bear all the downsides of exploration and still would have to share the spoils with the rest of the group. When IPC was unwilling to exercise the option jointly, Gulf Oil on December 21, 1928 sold it to the Standard Oil Company of California.

Terms of the concession and British resistance to American participation

The agreement was divided into a 2-year exploration phase ("First Schedule"), covering all of Bahrein, a surface search not exceeding 20 feet of depth for signs of hydrocarbons, followed by a 2-year prospecting (exploratory drilling) phase ("Second Schedule") at the end of which a mining lease over 100,000 acres (ca 51% of the area of the country) divided into no more than 3 blocks was to be awarded, followed by a 55-year mining lease period ("Third Schedule").

A considerable diplomatic back-and-forth developed during the following years in which the British government asserted its political influence when after a lack of British investment United States capital was attempting to gain access under the terms that were apparently, in the eyes of Britain, not meant to apply to foreigners.

On December 2, 1927 the exploration license was extended for one year by the Sheikh. The British Secretary of State for the Colonies Leo Amery in June 1928 instructed his Political Resident in the Persian Gulf to effect an alteration of the concession to include the stipulation that the lease holder had to be a company under British or British Dominion law. The Eastern and General Syndicate (EGS) sent 3 geologists to the island in the winter of 1927/1928 and by October 1928 had decided to attempt to get a further extension of the exploration phase and send more geologists. When EGS could not find a British company willing to invest in the enterprise, they turned to an American company that was as member of the Iraq Petroleum Company subject to the Red Line Agreement and thus not outright able on their part to work the concession without first getting approval from the consortium. EGS had received one pessimistic prospect for oil from their first geologist, 4 optimistic prospects thereafter and were at the time planning to send geologist #1 back again to reexamine all available evidence. Secretary Amery, acting via the Colonial Office (the conduit for all communication with EGS), then tried to get the British company clause inserted by asking EGS to try and insert it in the course of obtaining their second licence extension, to which EGS objected, because it would have alienated their option holder Gulf Oil and would have put EGS at risk of losing the concession and stranded their investment. EGS in turn wanted the British government to lean on the Anglo-Iranian Oil Company (AIOC) or through AIOC on the Iraq Petroleum Company (IPC). The lack of interest shown by AIOC and the Gulf Oil purchase of an option applied also to other EGS concessions that had been won: in Kuwait, Hasa province (Saudi Arabia, May 6, 1923) and the Neutral Territory between Saudi Arabia and Kuwait (May 17, 1924). It was Gulf Oil who had approached EGS after talking to an EGS geologist (T. George Madgwick) who had returned from the Middle East to the United States. Two agreements were signed on November 30, 1927: (1) Gulf Oil's option on the Bahrein concession and (2) Gulf Oil's option on all other (Mainland) EGS concessions. EGS paid the 10,000 rupees annual royalty (Article VI) to the Bahrein state on December 2, 1928. Standard Oil of California (SOCAL), not restricted by the Red Line Agreement, had in the meantime bought the option from Gulf Oil and on January 11, 1929 had incorporated a Canadian subsidiary, the ''Bahrein Petroleum Company'' in anticipation of what would be acceptable to the British government and stood ready to begin work on the concession. In April 1929, EGS was still trying to get approval for the transfer of the concession to SOCAL from the British Colonial Office. In an interdepartmental conference held in the Colonial Office on June 7, 1929, representatives of the British government prepared arguments to present to EGS that either their concession had lapsed (which was the result of British resistance), or that the request for an extension was (would have been) without merit. The conference then compiled a list of stipulations beneficial to the British government under which they would be willing to recommend to the Sheikh to extend the licence. The company was to be registered in Britain, the chairman, managing director, local general manager and the whole local staff with some exceptions were to be British. The Colonial office was delighted when in a July 19, 1929 meeting EGS did not dispute the right of the British government to impose restrictions and it was not necessary to make use of the prepared arguments. The American reply was essentially a refusal of all conditions. They opposed most strongly lack of control over local personnel in charge.

...

EGS paid the 10,000 rupee annual royalty on December 2, 1929.

...

The concession was formally assigned to the Bahrein Petroleum Company Ltd on August 1, 1930. BAPCO applied for the prospecting licence to run for 2 years from December 2, 1930.

Oil found in 1932

In June 1932 the '' Jebel Dukhan No. 1'' well (Dukhan Hill No. 1) at the southern base of the hill struck oil at a depth of 2,008 feet and flowing at a rate of 2,400 bbl/day, in January 1933 No. 2 well, 2.5 miles north of No. 1 and drilled with the same cable tool rig, struck 33° API gravity oil at the same depth flowing at a rate of 1,500 bbl/d. A rotary drill was substituted at No. 3 well at the depth of 1,635ft in order to explore lower lying strata.

Once oil was found, the conditions were very favorable. All the technical equipment needed to lay a pipe and construct a loading dock from local building materials could be fitted on a single ship. The tanker ''El Segundo'' with a crew of 45 sailed from San Pedro on December 28, 1933 and arrived via Mumbai on February 22, 1934. She anchored 16,000 feet offshore beyond the stretch of shallow water that was to be bridged by a 12-inch pipeline resting on the ocean floor. Five 8-ton anchors at the loading berth held in place 5 marking buoys at a depth of 50 feet of water. On the island of Sitra, 3 tanks totalling 250,000 barrels and one 7,500 barrel tank for ballast water were erected from sheet steel brought by the El Segundo. From the terminal on Sitra to the wells, 10 miles of 6 and 8-inch gathering lines were laid. The loading capacity of the terminal was built to an initial 10,000 barrels per day. A road was built to the terminal, including 1,200 feet of a trestle and a draw bridge.

On June 7, 1934 the ''El Segundo'' departed with the first load of 25,000 barrels, bound for Yokohama, and brought 500 barrels back for analysis to Richmond, California where she arrived on August 1. And so, Bahrain oil entered the market a few weeks before the first oil from Kirkuk.

In 1935 the decision was reached to build a 10,000 bbl/d refinery and ground was broken in October 1935 at a site on the northwest of the island opposite Sitra between the oil field and the loading dock. Before it was completed a contract was let for the second unit to double its capacity, at which point it began limited operations of those parts of the processing chain already completed. The ''Oil and Gas Journal'' published a technical description in the 1937-12-30 issue, stating the capacity as 25,000 bbl/d, but in principle already capable of more if a few bottlenecks were removed. The official opening ceremony took place on December 11, 1937. By then, there were a total of three 12-inch, one 10-inch and one 8-inch sea loading lines (one for each type of refined product) and 2,407,150 barrels of storage capacity of which 541,200 were for crude oil. Exports of crude petroleum fell from 4,286,000 barrels (11,742 per day) in 1937 (most of it to France, Italy, Japan) to just 336,000 barrels in 1938 and stopped entirely afterwards. Bahrein became an importer of crude oil and an exporter of refined products.

The Italian air force bombed the refinery on October 19, 1940, but caused practically no damage except that resulting from changing allocation of military resources in the aftermath.

In 1945, a 34 mile 12-inch 62,000bpd pipeline was laid to connect the mainland's Dammam field to the refinery on Bahrein Island, whose capacity was concurrently increased to 60,000 barrels per day. The Ras Tanura refinery and associated pipeline infrastructure was built at the same time and began initial operations at 50,000bpd a little later at the end of 1945. ''Oil Weekly'' included a pretty map of all the infrastructure in the 1945-07-30 issue.

To January 1, 1946 a total of 74 wells had been drilled: 62 producers, 4 observation and 8 were shut-in.

Notes

References

External links

*

{{Authority control

National oil and gas companies
Non-renewable resource companies established in 1929
Oil companies of Bahrain
Energy companies established in 1929
Standard Oil