corrects Group 3 base oil premiums in paragraph 2
State-owned Bahrain Petroleum (Bapco) has scrapped its term gasoline supply contract for next year as it cuts production of the motor fuel to free up feedstock for the new base oil plant at its 262,000 b/d Sitra refinery.
The 400,000 t/yr (8,200 b/d) base oil plant will export high-quality Group 3 base oils and offers much higher profit margins than gasoline exports. European gasoline's premium to crude has held between $4/bl and $9/bl over the past six months. Group 3 base oil's premium to crude has risen to around $119/bl this month, up from $61/bl in early June. Bapco last year sold 9,000 b/d of gasoline in its 2010 term contract.
Finnish refiner Neste Oil will market the base oils from the new unit and has targeted a start-up date for the plant in the second half of next year. Mechanical completion is due by the end of this year, with precommissioning work early next year. This will coincide with a heavy round of maintenance at the Sitra refinery that includes the shutdown of its 249,000 b/d crude distillation unit and vacuum distillation unit between January and April.
The base oils unit will use unconverted oil left over from the refinery's 60,000 b/d hydrocracker that Bapco brought on stream in 2007. Unconverted oil is a valuable feedstock for gasoline-producing fluid-catalytic crackers (FCCs). Bapco has a 43,000 b/d FCC.
Refiners can tweak hydrocracker unit operations to produce more diesel at the expense of unconverted oil, depending on refining economics or a refiner's ability to reprocess and add value to the unconverted oil.
Bapco is also cutting its 2011 gasoil term volume supplies by as much as 50pc from this year's volumes.
Neste operates a similar 250,000 t/yr Group 3 base oils plant at its 197,000 b/d Porvoo refinery in Finland.
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