Ahli United Bank will provide a $120 million loan to finance Oil and Gas Holdings stake in the Bahrain Lube Base Oil Co. joint ventures $430 million API Group III base oil plant, state-run Bahrain News Agency reported Monday.
Oil and Gas Holding and Bapco together hold a 55 percent stake in the joint venture, called Bahrain Lube Base Oil Co. Espoo, Finland-based Neste Oil holds the remaining 45 percent in the joint venture. The plant is expected to produce 400,000 metric tons per year (7,700 barrels per day) of Group III base oil. The news agency noted that the new plant will utilize feedstock from Bapcos low sulphur diesel plant.
In June, a Neste official said construction work had begun, and start-up was scheduled for second-half 2011.
The project will benefit from the increasing demand across the world for low sulphur base oils in the production of lubricants, said Abdul-Hussain Bin Ali Mirza, minister of oil and gas affairs, and chairman of Oil and Gas Holding Co. The banks market presence and track record in successfully financing high-profile infrastructural and industrial projects played a key role in the decision to sign the agreement on Monday, he continued.
The lubricant base oil project will not only generate additional revenue but also create new employment opportunities, said Adel El-Labban, group CEO and managing director for Bahrain-based Ahli United Bank, in the news agency report.
The joint venture partners awarded a $314 million contract to Seoul, South Korea-based Samsung Engineering in August 2008 for engineering, procurement and construction of the Bahrain project.