The heart of the matter

With Abdulkarim Al-Sayed, CEO, Bahrain Petroleum Company.

In the second part of our exclusive interview with Abdulkarim Al-Sayed, CEO for the Bahrain Petroleum Company, he discusses the HR issues affecting the industry, technological advances and the growing importance of the Middle East as the future energy centre of the world.

“Bapco used to produce between 75,000 to 80,000 barrels a day back in the 70s. Now we are down to 35,000 barrels a day. Our challenge is to enhance the production of oil and gas and at the same time look at the opportunities for gas import.”
-Abdulkarim Al-Sayed, CEO, Bahrain Petroleum Company

O&G. BAPCO finances a number of its employees through higher education programs, both in Bahrain and abroad. Do you think it is important to develop your talent this way?
Abdulkarim Al-Sayed. In the past Bapco believed that its past good reputation and the loyalty shown by the older generation workforce would automatically be carried forward to the younger generation. This has not happened. The better-performing and brilliant graduates and other well-qualified youngsters are being attracted to other areas such as finance, stock market, international taxation, insurance, law, and private entrepreneurship.

The skilled manpower crunch in the oil and gas sector this time is not a short-term phenomenon. The Middle East does realize that this drastic shortage cannot be overcome through expatriate resources alone. The right environment must be created in our own countries to promote the pursuit of engineering and technical careers amongst our school leavers.

There are two key areas related to the indigenous workforce in which we need to invest significantly more than what we have been doing in the past: training and re-training of existing workforce, and adoption of performance-based rewards (can only be done by adopting a suitable skills inventory assessment model).

It should be noted that even during the past, many resources have been invested in training of our personnel. Most NOCs have dedicated training and development departments as well as training co-ordinators assigned to each client departments.

Many training consultants and organizing companies have opened branch offices in the Middle East to cater for the huge demand for training courses that exists in this region. Under Bapco’s Skills for the Workplace scheme, a major project is run and hosted to provide unemployed young Bahrainis with the skills they need to gain a successful entry to employment.

O&G. Technology is obviously very important in your industry. Is BAPCO looking to make more technological advances this coming year?
AAl-S. Bapco is looking for technological advances in all areas of operations. On the production side, enhanced oil recovery (EOR) technology is being looked at as a means to sustain oil and gas production. In refining, emphasis is on advanced process control to maximize production of high-value middle distillates and on ways to process the “bottom of the barrel” to minimize the fuel oil pool. In the storage area, implementation has begun of high-tech gauging techniques using the advanced SAAB radar gauging technology. In the marketing field, smart fuel cards have been introduced to streamline the cash collection system and Bapco has embarked on an ambitious plan to upgrade and modernize service stations.

The Bahrain Field was discovered in 1932 and was the first oil discovery in the southern part of the Arabian Gulf. Last year Bapco initiated a new development phase following comprehensive and detailed studies using state-of-the-art modeling and visualization software systems. The new development plan aims at doubling the number of wells drilled per year from 24 to 48 wells, and also introducing special architecture wells designed differently for each of the 16 producing reservoirs in the field.

On another front, Bapco and NOGA initiated last year a bid round to invite major International Oil Companies to participate in enhancing the production and recovery from the Bahrain field. The objective of such a joint venture is to extend the life of the Bahrain field beyond 2030 at a sustained production rate that significantly exceeds the current production levels.

Offshore and onshore development of oil wells is also on Bapco's agenda. Bapco used to produce between 75,000 to 80,000 barrels a day back in the 70s. Now we are down to 35,000 barrels a day. Our challenge is to enhance the production of oil and gas and at the same time look at the opportunities for gas import.

Bapco is still considered to be a relatively old refinery having multiple units with a design capacity of 250, 000 barrels a day. A modern refinery of this capacity will probably have one or two crude units but Bapco at present has five, which is not cost efficient. Future plans are to rationalize this. Also, Bapco's refinery is producing 15% of the barrel as fuel oil. Fuel oil, referred to as the bottom of the barrel is the heavy stuff that is sold at a lower price than the crude oil used as feedstock to the refinery. So if this 15% can be converted into a higher value product with the help of modern technological processes then it will result in more profitability for the company.

So 2008 is the year when Bapco will be studying different technologies that will transform this 15% into a more profitable fuel. This project is estimated at over US$1.5 billion (BD 654 million).

On the refining side, Bapco is looking beyond 2012 – at its refining capability to give itself a competitive advantage and better position to capture the opportunities that future market environments may offer. This initiative has been named as the Refinery Master Plan Project.

O&G. How do you see the Middle East region developing over the next few years with regards to its oil and gas sector? What will be the key issues, challenges and success stories?
AAl-S. The concern related to human resources and skilled manpower remains at the top of the list.

There is a need to sustaining production levels in an efficient manner so as not to rob future generations of their chances at development and enjoying the hydrocarbon generated wealth.

Another area that needs our immediate attention is how to ensure security of our installations, transport and supply routes. We need to conduct detailed assessments of our security vulnerability issues and concerns, and implement viable remediation measures to reduce any perceived risk.

We need to go full steam ahead with our commitment to energy conservation. This will require a new way to look at projects aimed at energy conservation. Most NOCs grant local subsidies per their respective government legislations for local consumption of oil and gas products. For economic justification of energy conservation projects we need to adopt the more realistic free market prices for utilization of gas and oil products.

Accelerate the implementation of all projects aimed at enhancing the environmental performance of our installations. We need to ensure that any hiccups and belches from our stacks have virtually no impact on the communities that live in the vicinity of our plants. The dream is to achieve totally flare-less refinery operations.

We must contribute to and promote the development of the non-oil sector and regional infrastructures: transport, communications, education, and health services.

This is the opportune time to make heavy investments in R&D and promote academia in the region.

The new-found oil wealth has created a boom in the construction industry and as a result there is a tremendous pressure on available real estate. When the Bapco refinery was being built back in the early 1930s, we just drew a line in the sand and claimed a “Leased Area” large enough to minimize impact of our operations on nearby communities. Bahrain is a very small island and we no longer have the luxury of using space as a risk mitigation measure.

O&G. In line with best practice, BAPCO has created an EHS policy that integrates the functions of occupational health, industrial safety and environment. Can you tell us more about this?
AAl-S. Bapco is fully committed towards the protection of the environment, the health and safety of its employees, contractors and the surrounding community as stated in its EHS Policy and guidelines. Bapco also recognizes the importance of minimizing the environmental impact associated with all its operations and sound environmental management forms an integral part of its business philosophy. When someone asks me how many safety officers are there in Bapco, my answer is the entire workforce; i.e. about 3200.

In line with best practices, we have embarked on a new initiative called Behavior Based Safety. BBS is designed to ensure involvement in H&S matters by all employees and contractors. The program implementation commenced in November, 2006 and will be completed by end of 2009. Industrial Safety Committee (ISC) had launched Behavior Observation Obtains Safe Trends (BOOST) process across the Company in the first quarter of 2007. The process is expected to take 24 months to fully mature and has the following objectives:
• Reduce exposure and injuries
• Increase engagement of all employees in safety
• Move to a more proactive safety approach with upstream measure
• Improve safety behavior, attitudes, conditions, culture and systems

In response to Bahrain Ministerial Order No.10 in 1999 (based on Amiri Decree No.21 with respect to the environment in 1996), which prescribed limits for emissions to air and discharges to water, Bapco carried out a review of its compliance status with the legislation and identified the gaps between the current performance and the requirements of the legislation. A comprehensive environmental compliance plan and program was agreed with the Government General Directorate of Environment and Wildlife Protection (EWP). These projects were included in Bapco’s Strategic Investment Program.

O&G. BAPCO is one of the founding members of RESCO (Regional Clean Sea Organisation), the company is an expert in oil spill response. Do enough oil and gas companies take these safety issues seriously?
AAl-S. All the regional major NOCs from Saudi Arabia, Qatar, Kuwait, Oman, Abu Dhabi, Dubai, Iran and Bahrain, including Saudi Chevron are members of RECSO. A major membership drive is in place requesting all the national tanker companies of the region to. Bapco takes its responsibilities very seriously in this matter.

Bapco recently signed a five-year alliance mobilization agreement with the world’s largest international oil spill response organization, OSRL/EARL (Oil Spill Response Limited and East Asia Response Limited). Bapco wants to ensure that it has the very best protection for the Kingdom of Bahrain and its territorial waters because of the high risk posed due heavy shipping of crude oil and products in the Gulf region. It is vital that response time to an oil spill is within the first two to four hours otherwise it becomes difficult to combat a spill effectively.

The key to RECSO’s success is and will be “mutual co-operation”. We all recognize the mammoth challenge before us in view of the shear volume of barrels being transported from the region day in day out.

The governmental environment agencies have an equally significantly role to play in this matter. This is why RECSO must maintain an effective working relationship with another organization; namely the Regional Organization for the Protection of Marine Environment (ROPME) and its marine wing, the Marine Emergency Mutual Aid Centre (MEMAC).

In my view co-operation and mutual aid in combating oil spills and the clean-up operations that follow is extremely important. But more important are the oil spill prevention efforts. One key area in this is sharing of tanker companies past performance information. The Lloyds List therefore provides vital information to port authorities in this respect. Operators with sub-standard or defective vessels can be identified and remedial measures can be implemented to safeguard the Gulf.

Bapco has developed a comprehensive oil spill contingency plan. It is the company policy that any pollution incident at sea or land that might get linked to its facilities and operations will be promptly addressed, the first priority in all cases being to prevent the pollution from happening in the first place. However in the event of an incident, a comprehensive oil spill contingency plan has been put in place to mitigate the consequences on the environment at sea or land.

In addition a number of marine assessment studies have been carried out to assess the coastal ecosystem off the Bapco Refinery over the last 21 years by well known Swedish experts from the universities of Stockholm and Kalmar. The previous assessments have indicated a significant improvement in the quality of the effluent outfall from the refinery. The last assessment was carried out in April 2007.