Oil refinery stays ahead in the recession

As oil refineries face one of the toughest periods in their history, Bapco’s deputy CEO DR Eion Turnbull reveals what the company is doing to stay one step ahead of the competition.

“At the heart of the organisation are the people, their loyalty and the people thinking that the managers care about them in a holistic sense and make them feel special”
-Eion Turnbull

Although Bapco may appear often in the news headlines for its workers' strike action, the company is keener than most to publicise its employee welfare schemes. Press releases are regularly issued describing the latest health and safety programmes or staff training days. And according to Deputy CEO Dr Eion Turnbull, it is the empowerment of its people that differentiates Bapco from the rest of the region's NOCs. "Fundamentally I believe these days, that if you look at different refineries, the technology and the hardware that sits behind them is broadly the same. In fact the real difference between the pace setters and the laggers is the way people get engaged in the business and contribute to its success. I firmly believe the difference between the best and the rest is the people. At the heart of the organisation are the people, their loyalty and the people thinking that the managers care about them in a holistic sense and make them feel special." He goes on to say that this is very often not the case at GCC-based oil companies. "Some companies talk about issues like safety but you get a sense of them being driven by the wrong reasons. For example a manager might drive safety very hard because it's going to affect his or her bonus, not because they really care about people or their well-being."

People power

Elaborating on how Bapco's approach is different Dr Turnbull says it provides support and training for employees' career development, supports the families of injured workers and runs health and safety schemes such as a recent ergonomics awareness campaign.   Despite this focus on employee welfare however, Bapco workers frequently strike over pay and working conditions, with the most recent industrial action taken in February when hundreds of staff protested against the company's refinery facilities, led by the Trade Union of Bapco Employees, which issued 52 different demands including automatic retirement for workers aged over 60. Similar strikes were held the previous February by around 700 workers demanding increased bonus payments.  While these strikes indicate worker dissatisfaction, they are also perhaps indicative of the company's willingness to provide workers with a voice by supporting the existence of a trade union.  Indeed Dr Turnbull denies that Bapco's record with regards to staff treatment is tainted and claims the only challenge it now faces in this regard is to ensure it keeps its standards up. "I think Bapco has an enviable history, in terms of safety, care and concern. The challenge for us now is how to maintain and sustain that because quite often when you are very good, there is a tendency to maybe take your foot off the accelerator and think you've done it."

Safety first

One of the ways in which Bapco aims to perpetuate its "enviable history" is through its strong focus on health and safety issues. Dr Turnbull points out: "If you have one big incident on the refinery, you can go from looking very good to looking very poor very quickly."  As well as operating ongoing health and safety training schemes for its staff and funding some through higher education programmes, Dr Turnbull says the company is looking at ways in which to use technology to increase the safety of its workers.  One such initiative he says is the installation of remote sensing devices to detect the early signs of dangerous gas emissions. "There might be areas where there might, for example, be a release of volatile organics. The sensors can detect a combination of chronic and acute gases," Dr Turnbull explains.
Technology is being used also to help the company reach its environmental targets, particularly reducing emissions of sulphur gases from its refineries. In order to achieve this it is investing US$400 million in research and development to find a solution.  Describing the project Dr Turnbull says: "Previously our gases were not treated as thoroughly as we'd like to so not all of them ended up in our fuel gas. There were three major pieces of work. The first major piece was to identify the different gas strains and to separate them, put them through different scrubbing units to extract the H2s and put them through sulphur recovery units. These are the modern recovery units where you actually have the three-stage conversion process with a unit at the end that really gets down to the very low levels of sulphur compounds released."

Another environmental scheme the company is running is a state of the art new wastewater treatment plant that uses membrane technology combined with biological technology to clean up the fuels before they become released in wastewater. "This takes away wastewater and treats it through chemical processes and then through biological processes. It was quite a challenging project because our wastewater streams have some characteristics that are unusual in terms of high temperatures and high levels of salinity. Also some of our specifications on clean water were much tougher than in other parts of the world. So getting the combination of tough conditions and tough criteria was difficult. What we ended up with was a membrane based biological system."  He goes on to say that environmental schemes of this sort are all the more important given the increased future global demand for energy: "Sudden demand for energy to meet ever increasing needs really plays out on two sides. One side is how you actually restrict demand and how to be more energy efficient so you don't consume energy in the production process itself. The other side is how you make more of the product itself."

Competitive times

But while Dr Turnbull is working to find ways of sustainably meeting world demand, he also says one of the biggest challenges the company faces in the shorter term is the growing competition from new refineries that are slated to open, particularly in emerging markets such as India - combined with the impact on short term demand from the economic downturn and growing eco-awareness. "There are a lot of facilities coming online and some big ones like the refineries over in India. And because of awareness of the environment I think that in the western world we're going to see demand either shrink or stay very flat as they make moves to contain their energy consumption. What we're seeing around the world is that some refinery projects have stopped altogether and others have been slowed down. We're seeing shutdowns and shut-ins of refineries on a scale that I don't think we've seen in maybe 30 years. It's having a profound impact on the industry at the moment."

With this in mind, Dr Turnbull says he is working on ways to cut down on the company's operational costs, "We are looking at how we can control our costs in a meaningful way during this period."

The company is also forging ahead with plans to expand its refinery capacity despite the gloomy economy prospects. Last year it announced plans for a US$2 billion expansion of its Sidra refinery which would take capacity to between 350,000 and 400,000 bpd, from around 267,000 bpd. The success of the project depends on the building of a new pipeline from Saudi Arabia through which it will receive new crude oil supplies, which are expected to be pumped through from 2011. The company is also in partnership with the Finnish company, Neste Oil to establish a base oil plant. It will aim to take some of the lower grade oil streams from the hydrocracker and upgrade them to high quality base oils that can then be used for high performance engines. "It's a major undertaking and that's just the sheer logistics of getting all the equipment here on time and getting the right sequence of events around the construction and the commission of testing. You have got to be very careful with hydrocracker units."
Like every oil company in the GCC, Bapco is working to achieve a delicate balance between planning ahead for increased global demand and adapting to current economic conditions, which have stifled it. Its ambitious expansion plans suggest however that its eye is set firmly on a brighter future.