Bahrain, S. Arabia Sign $300m Oil Pipeline Deals

Bahrain, S. Arabia Sign $300m Oil Pipeline DealsBahrain, S. Arabia Sign $300m Oil Pipeline Deals

Saudi Arabia and Bahrain have signed contracts worth around $300 million to lay a new 350,000-barrel per day oil pipeline between the two countries, with the link due to be operational in 2018, Bahrain's energy minister said on Thursday.

Bahrain relies on output from the Abu Safa Oilfield that it shares with Saudi Arabia for the vast majority of its oil and the new pipeline will replace an aging 230,000 bpd link and enable Bahrain Petroleum Company expand the processing capacity of its 267,000 bpd Sitra Refinery, Trade Arabia reported.

Eventually, the new pipeline's capacity could be increased to 400,000 bpd, Abdul-Hussain bin Ali Mirza said at a signing event in Manama.

"It will be finished by the end of 2017 or early 2018 and then there will be a six-month trial period for the new pipeline," said Mirza, adding that the old pipeline was likely to be removed from service in the second half of 2018.

Arabian light crude will flow from Saudi Aramco's Abqaiq plant via the 115-kilometer pipeline, 73 kilometers of which will run overland and the rest under the Persian Gulf.

Agreements to build the pipeline were signed with Saudi Arabia's Al-Robaya Holding Company and the National Petroleum Construction Company of the UAE.

The former will complete onshore engineering, procurement and construction works in the kingdom as well as conducting engineering and procurement works in Bahrain. The latter has been awarded an EPC contract for the offshore work.

A contract for construction at the Bahrain end of the pipeline has yet to be awarded, according to a statement from Bapco.

The new pipeline has been long talked about. Mirza said in March the pipeline would be ready in 2018, after officials had previously estimated completion by the third quarter of 2016.