OilVoice - Neste Oil and Bapco Agree on Building a Joint Base Oil Plant in Bahrain

Neste Oil and Bapco Agree on Building a Joint Base Oil Plant in Bahrain

Monday, June 16, 2008

Finland's Neste Oil Corporation, Bahrain's Oil & Gas Holding Company (OGHC) and the Bahrain Petroleum Company (Bapco) have decided to establish a joint venture known as the Bahrain Base Oil Company to build a high-quality lubricant base oils plant in Bahrain. The plant will have an annual capacity of 400,000 tons of VHVI (Very High Viscosity Index) base oil for use in blending top-tier lubricants. It will be one of the world's largest VHVI base oil plants when it begins production, which is scheduled for the end of 2011.

Total investment cost of the project is estimated to be between 250 and 300 million euro, of which Neste Oil's share is 45%, same as the company's ownership in the joint venture. Both Bahrain's Oil and Gas Holding Company and Bapco own 27.5% of the joint venture. OGHC is owned by the Government of Bahrain and owns 100% of Bapco.

Feedstock for the new base oil facility will be provided by the hydrocracker unit commissioned in 2007 at Bapco's Bahrain oil refinery. Neste Oil will be responsible for the sales and marketing of the output of the joint venture plant. Bapco will also provide the Operations, Maintenance and Management services to the Joint Venture.

This project underlines Neste Oil's and Bapco's commitment to new-generation, high value-added base oils," said Kimmo Rahkamo, Executive Vice President, Specialty Products at Neste Oil. "Demand for these sulfur-free base oils is increasing globally, thanks to their ability to meet current and future performance requirements, as well as more stringent environmental standards. I strongly believe that this project will prove a success for both parties."