Bahrain’s state-owned Bapco has set forth an expansion that has huge implications for the Middle East region and sets Bapco up to become a global leader in oil production, if it can continue on this upward trajectory. Bahrain is known for its approach to global cooperation, and the new expansion of its refinery will allow the company to ramp up production and increase barrels per day significantly. Bapco has the added benefit of an unconventional partner that is willing to offer its insightful and unique approach to the sector.
Bapco Energy is focusing on downstream profits for the future
The natural order of the sector is to primarily focus on upstream oil production. While this has served the region well in the past, it’s a new world with all new possibilities, and the state-owned company is acutely aware of that. Now the company has reported that its new approach will be to focus on downstream oil production and could become a leader in the energy sector in the Middle East.
The energy sector in the Middle East is an ever-changing beast that requires a considered and unique approach. Instead of following traditional norms, Bapco has partnered with EOG Resources, a U.S.-based energy giant and pioneer of the unconventional approach to the downstream oil sector. While many countries in the region have vast oil reserves, reaching them is a challenge that requires professionals who know what they are doing.
“We are in the very last phase of that program. Most units are all up and running, and we are kind of getting close to commissioning the last units in the refinery, It is undeniably the case, when you build residual hydrocrackers with the ability to go deeper into the bottom of the barrel … we’re going to be stepping away from just running sweet Arab crude that comes from the Saudi-Bahrain pipeline” – Bapco’s group chief strategy officer, Alexander van Veldhoven
Bapco is leveraging the expertise offered to reach maximum potential
A smart move by the state-owned company. Leveraging the expertise of the American energy giants will serve as a great stepping stone to establish Bahrain as a leader in the sector for generations to come. The final stage of commissioning the refinery will allow it to increase its production from 267,000 barrels per day (b/d) to 380,000 b/d.
That represents a significant shift in production and output. The Bapco heads have conceded EOG a 49% stake in a Bahraini subsidiary to develop tight gas resources, and it is the first deal in more than a century, representing a new approach to cooperative oil production on the part of the Bahrain government, which has not always made the best choices.
The expansion is set to come to market in the last quarter of 2025, and by producing more refined products, Bapco can reduce reliance on crude exports and capture higher profit margins. Sounds like a win-win for all involved. The project will see a significant rise in total barrels produced, while the Bahrain government can reap the benefits of a massive cooperative project.
“We already started to trade together … the next phase is to really kind of incorporate that and set it up as an integrated joint venture kind of trading company that has yet to come. We are getting very close to that. – Bapco’s group chief strategy officer, Alexander van Veldhoven
The project represents a shift in oil production in the Middle East sector
Bapco will surely become a leader in the region’s energy sector, thanks in no small part to the expansion and redirection of focus that the project represents. The Middle East thrives on oil production and has produced vast amounts of wealth for the region overall. Whether or not this new development will continue that trend remains to be seen. What we do know is that the project is set to come to market in Q4 and could redefine energy production in the region for the foreseeable future.
