Neste, Bahrain Firms to Establish J.V.


Neste Oil Corp., Bahrains Oil and Gas Holding Co. and the Bahrain Petroleum Co. on Monday outlined plans to establish a joint venture, Bahrain Base Oil Co., to build a 400,000 metric tons per year API Group III base oil plant in Bahrain that was initially announced in 2005. The project, which was once scheduled for completion in 2009, is now expected to begin production at the end of 2011.

Last December, Matti Lehmus, Neste vice president for base oils, said the schedule had slipped due to the time taken to finalize the engineering and to receive final, more accurate cost estimates.

Total cost of the project is now an estimated 250 million to 300 million (U.S. $387.7 million to $465.2 million), according to Mondays announcement. Neste Oils share of the cost is 45 percent, as is its ownership percentage in the joint venture. Bahrains Oil and Gas Holding Co. and Bapco each own 27.5 percent of the joint venture. The holding company, which is owned by the government of Bahrain, owns 100 percent of Bapco.

Feedstock for the new base oil facility will be provided by the hydrocracker unit commissioned in 2007 at Bapcos Bahrain oil refinery. Neste Oil will be responsible for the sales and marketing of the base oil plants output. Bapco will also provide operations, maintenance and management services to the joint venture. “Bapco contributes amongst others a high-quality refinery infrastructure with a large hydrocracker providing a suitable feedstock for the production of high quality VHVI [very high viscosity index] base oils,”Neste’s Lehmus told Lube Report. The Bahrain base oil plant’s products will be marketed by Neste Oil under the Nexbase trademark.

The project underlines Neste Oils and Bapcos commitment to new-generation, high-value added base oils, said Kimmo Rahkamo, an executive vice president for specialty products at Neste Oil in Espoo, Finland. 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.

Neste officials have said the largest markets for sulfur-free, very high viscosity index base oils are Europe and North America, with demand constantly growing in Asia and the Middle East. The location of the unit allows for efficient logistics to all major VHVI markets globally,Lehmus said of the Bahrain plant.

Last December, Neste, Takreer and OMV announced formation of another joint venture to build a plant to produce 500,000 mt/y (about 10,000 barrels per day) of API Group III base oil in Ruwais, Abu Dhabi.

Neste currently operates a 4,670 b/d Group III base oil refinery in Porvoo, Finland. The company is considered a key merchant player in todays Group III market, along with South Koreas SK and S-Oil. Chevron, Petro-Canada, Exxon Mobil and another 10 refiners also produce Group III today, but primarily or entirely for captive use.

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