Bahrain on track to boost refinery capacity

REFINERY CAPACITY: Bahrain plans long-term increase despite bleak outlook for industry. (Getty Images)

Bahrain plans to go ahead with a long-term plan to boost capacity at its refinery despite a bleak outlook for the industry as demand falls and capacity rises, a top oil official said on Monday.

"It is still the intention of Bahrain to continue its investment in the oil refining sector," Adil Khalil Almoayyed, acting deputy chief executive at the state-run Bahrain Petroleum Company (Bapco), told reporters on the sidelines of an energy conference.

Bahrain plans a $2 billion expansion at its Sitra refinery, which would take capacity to between 350,000 and 400,000 barrels per day (bpd) up from around 267,000 bpd.

Analyts say that falling global oil demand and increased capacity were likely to hurt refining margins for years to come and put pressure on old and inefficient plants to close.

"This refinery was built in 1936," Almoayyed said. "It has existed for years and we have seen many booms and busts."

The expansion depends on Bahrain receiving increased crude supplies from neighbour Saudi Arabia through a new pipeline.

A feasibility study for the 350,000 bpd pipeline would be completed by the end of the year, Almoayyed said. The $350 million line would replace an existing pipeline with capacity of 230,000 bpd.

Bapco has said the pipeline would start pumping oil in 2011. (Reuters)

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