Bahrain’s Gulf Petrochemcial Industries Company (GPIC), which produces urea, ammonia and methanol, plays a leading role in the kingdom’s chemicals sector, contributing about 2.5 per cent to the country’s GDP, according to the latest GPCA Pulse of the Chemical Industry Report.

Despite being the smallest chemicals producer in the GCC, Bahrain has benefited the most from a strong performance in key products groups, such as fertilizers and polymers largely due to the current product price trend, the report stated.

“Bahrain took opportunities to generate higher revenue from fertilizer products. As a result, its revenue has increased by 39 per cent in 2018. As a small producer, it was able to adapt to shifting customer needs quickly and efficiently,” it said.

GPIC’s President, Dr Abdulrahman Jawahery, however, attributes the company’s strong performance to the best practices adopted by the company.

“GPIC has adopted a best in class methodology of process management systems and continuously strives to control the cost of production by adopting best practices. This helps GPIC to cope with a low oil price scenario and ongoing unpredictable global economic conditions, and enables GPIC to continue to be a profitable company,” Dr Jawahery said in an exclusive interview with Gulf Industry.

The company achieved a cost savings of 4 per cent on overall approved budget for the year 2019 and savings of 5.2 per cent on fixed cost, he revealed.

Dr Jawahery: focusing on cost optimisation

In 2019, GPIC registered the highest yearly production of urea since inception with a total of 726,907 million tonnes (MT), followed by ammonia at 466,306 MT and methanol at 451,330 MT respectively, Dr Jawahery said.

“GPIC’s total production capacity sits at 1.6 million tonnes, with roughly 40 per cent being urea, followed by ammonia and methanol around the same capacity percentage,” he added.

The company is planning a major turnaround of its plants in the fourth quarter of 2020 due to which its projected capacity output in 2020 is expected to be less compared to 2019.

“Our output capacity for 2020 as it stands reflects just over 651,100 MT for urea, with methanol at an expected 412,360 MT and ammonia at 425,200 MT,” he said while giving the projected production figures for 2020.

On the export front, GPIC exported a total of 1.25 million tonnes of ammonia, urea and methanol, 13 per cent higher than 2018. GPIC’s export records by product showed 463,435 tonnes of methanol, 5.4 per cent higher than 2018, 725,491 tonnes of urea, 5.2 per cent above 2018 and 58,599 tonnes of ammonia 56.6 per cent above GPIC’s planned exports during the year.

The total planned export of ammonia, urea and methanol in 2020 will be 1.11 million tonnes.

For GPIC, India has the highest share of the company’s total exports in 2019 with (32 per cent), followed by both Taiwan and Africa at (16 per cent).  Other markets are Thailand (11 per cent), Korea (10 per cent), Mexico (5 per cent), China (5 per cent), Australia (2 per cent), UEA (2 per cent), and USA (1 per cent).

Looking ahead, Dr Jawahery said that GPIC is focusing on a number of prospects and projects that align to its brand proposition, its 2030 Corporate Strategy and its strong partnership and relationship with its shareholders. “As we proactively explore these potential growth options, our decisions will be firmly grounded in a value proposition that makes investment sense for our shareholders and stakeholders alike,” he added.

The company is currently working on two major projects: GPIC Debottlenecking Project (DBN II) and Solar energy for the GPIC Club.

Excerpts from the interview:
 

What were the main highlights of GPIC’s performance in 2019?

For GPIC, 2019 demonstrated another remarkable success and achievements for the plants’ performance and reliability. All production plants excelled in outstanding performance, registered outstanding records in safety, production, and sustained running days without any production interruption.

GPIC received praise and recognition from its Board Members and shareholders alike for its driven attitude towards sustainability, corporate social responsibility and beyond excellence results.  This stewardship has helped charter GPIC’s course safely through the current volatile market and economic conditions affecting the industry.  We have continued to build on the enhancement and streamlining of our internal processes as well as our continued focus on cost optimisation and business continuity.

GPIC: staying competitive

Throughout 2019, GPIC has invested extensively into building the capabilities of the Kingdom’s future generations through its various educational programmes and partnerships. The company has also continued to pass on its knowledge and expertise across the industry and the region, in sustaining the environment and ensuring the adoption of sustainable technologies and processes.

Health Safety and the Environment highlights include: 32 million man hours without LTA; RoSPA international safety and chemical sector awards; Arabia CSR Award; successful completion of new UF-85 unit of urea plant with no lost time injury; Ministry of Labor award for the “Excellence in the occupational safety and safe working environment”

What was the total production and actual output for 2019, for each of the following products: ammonia, methanol and urea? What percentage increase or decrease is the company expecting for each of those products in 2019? What reasons do you attribute to the increase or decrease?

GPIC’s total production capacity sits at 1.6 million tonnes, with roughly 40 per cent being urea, followed by ammonia and methanol around the same capacity percentage.

During 2019, urea registered the highest yearly production since inception with a total of 726,907 MT, followed by ammonia at 466,306 MT and methanol at 451,330 MT respectively.

Our output capacity for 2020 as it stands reflects just over 651,100 MT for urea, with methanol at an expected 412,360 MT and ammonia at 425,200 MT.  A major turnaround is planned for the fourth quarter of 2020 and therefore our capacity output in 2020 reflects these differences in production figures.

What production capacity expansions did the company recently complete or are ongoing or due to be taken up in the near future?  What products will the expansions impact and by how much?

GPIC is constantly looking to add value to the market and to all of its shareholders and stakeholders.   The company firmly adopts, what we term, Integral-Forward-Focus, which means we manage our operations, our plants and our strategy pre-emptively.

Preemptive moves exist all along the value chain and it is about capturing those opportunities and/or cornering aspects such as raw materials and components to position GPIC’s product offering in a unique way.

As part of this overarching strategy, we have also adopted a number of step changes to increase the production capacity of our plants whilst at the same time never compromising our quality, efficiency and exceptional internationally recognized health and safety standards. 

Looking to the future we are focusing on a number of prospects and projects that align to our brand proposition, our 2030 Corporate Strategy and our strong partnership and relationship with our shareholders. As we proactively explore these potential growth options, our decisions will be firmly grounded in a value proposition that makes investment sense for our shareholders and stakeholders alike.

What is the status of the $8.8 million Urea Formaldehyde (UF 85) plant? Is the unit’s output as per the targeted - 22 metric tonnes per day (mtpd)?  Are you planning any expansion of the plant or any other facility?

In January 2019, GPIC successfully commissioned a 22 MTPD Urea Formaldehyde (UF-85) unit, which reflects GPIC’s sincere commitment towards society while ensuring sustainability of its operation through economic efficiency, effective use of its products, conservation of natural resources, minimising impacts on environment and bio-diversity.

This unit is designed and constructed for GPIC’s captive consumption. This makes the existing operation and manufacturing of granular urea more reliable without being dependent on the external agency.

What are the revenue expectations of GPIC for full-year 2019 and how would the figure compare with 2018? What is the projection for 2020?

Due to ongoing unpredictable global economic conditions, prices have fallen sharply for the GPIC’s products in the second half of 2019 and the same trend is expected to continue in 2020. Revenue expectations for the full-year 2019 is $304 million compared to year 2018 $341 million. The percentage contribution of each of the following products is: ammonia 0.1 per cent, urea 74.3 per cent and methanol 25.6 per cent. Revenue projection for 2020 is $269 million.

What were the export statistics for 2019? How does it compare with 2018? What is the projection for 2020?

In 2019, GPIC exported a total of 1.25 million tonnes of ammonia, urea and methanol, 13 per cent higher than 2018. GPIC’s export records by product showed 463,435 tonnes of methanol, 5.4 per cent higher than 2018, 725,491 tonnes of urea, 5.2 per cent above 2018 and 58,599 tonnes of ammonia 56.6 per cent above GPIC’s planned exports during the year.

The total planned export of ammonia, urea and methanol in 2020 will be 1.11 million tonnes.

Which were the top two export markets in 2019 (for the period for which you have the latest data) and together what was the percentage share in total exports? Which other markets did you export to in that period of 2018/2019?

For GPIC, India has the highest share of the company’s total exports in 2019 with (32 per cent), followed by both Taiwan and Africa at (16 per cent).  Other markets are Thailand (11 per cent), Korea (10 per cent), Mexico (5 per cent), China (5 per cent), Australia (2 per cent), UEA (2 per cent), and USA (1 per cent). 

How much worth of capex projects were undertaken by GPIC in 2019? What were the main projects undertaken?

During 2019, there was an approved capex BD 4,580,000, and the projects undertaken were:  replacement of obsolete Mark VI Control System and obsolete Generator Control Protection Panel (GCPP); replacement of electronic governor and protection system of urea plant CO2 compressor; replacement of steam generator coil EB-1202-5 with upgraded material in methanol plant; replacement of synthesis loop piping from P1 to P11 (downstream of HV-08001/3/4/5/6) in the ammonia plant (Phase II); relining of urea reactor (R-8201) bottom dish end and 1 m of bottom cylindrical portion with 25-22-2 material; replacement of obsolete analyzers for safe operation of the plants; replacement of various obsolete field instrumentation for safe operation of the plants; replacement of complex emergency paging system and enhance the existing cyber security controls.

What is GPIC achieving in terms of sustainability and the environment?

GPIC has taken numerous initiatives that are aimed at reducing dependency on fossil fuels through investing in renewables, energy efficiency and other sustainable solutions.

One of these successful projects that drives energy efficiency and reduces the overall GHG emissions is the introduction of energy efficient lighting at GPIC. Since 2013, we have installed 6,068 LEDs within our complex, replacing conventional lights, resulting in an energy saving of 1262.19 MWH/Y, a cost saving of $94,568 and a CO2 emission reduction of 630 tonnes per year.

Among the planned projects, we have:

a) GPIC Debottlenecking Project (DBN II): With an objective to reduce the overall specific energy per tonne of product, GPIC is carrying out a feasibility study for DBN II. The assigned consultant is currently working on the detailed feasibility report, expected to be completed soon.

b) Solar energy for the GPIC Club: A project is under engineering phase to provide solar energy to the GPIC Club. It will result in a saving of 675918 kWh per year, leading to a cost saving of BD16,000 per year. The project estimated cost is BD200,000 with a payback of nine years.

How much CO2 is being treated daily after the commissioning of the carbon capture system at GPIC?

The CDR plant based on MHI technology captures 450 MT per day of CO2 from the methanol reformer flue gases that was venting to atmosphere and recycles it back. This reduces the company’s carbon footprint in addition to resource efficiency and production augmentation. In addition to CO2 recovery, 355 kg /day of SOX are also removed.

It contributed to achieving a net reduction of 0.12 x 106Met of carbon dioxide per year and the carbon dioxide is recycled back to produce 120 MT of additional methanol and 80 MT of additional urea.  Currently, the CDR plant is operating at 80 per cent load and removing 370 MTPD of CO2.

How much cost savings did GPIC achieve in 2019 and how?

GPIC achieved a cost savings of 4 per cent on overall approved budget for the year 2019 and savings of 5.2 per cent on fixed cost. The savings are due to the following cost reduction initiatives:

• Implementation of various capex projects and modifications of equipment resulted in improvement in the energy consumption, plant efficiency and higher production.

• Efficient cost management strategy set by the Board of Directors has enabled cost reduction and optimisation particularly in fixed costs and staff restructuring.  So on top of initiatives to reduce variable costs, better negotiation of management with insurance companies and service contractors contributed in reducing or preventing fixed cost from any escalation.

• Such cost optimisation enabled GPIC to stay competitive in the market even though the raw material costs (gas and energy) are higher compared to GCC and global markets.

In future, the ongoing efforts by GPIC management to enhance the production efficiency and to ensure that the fixed costs are spread in a more economical approach (economies of scale) and thus reducing the cost of production per tonne further.

How has GPIC coped up with the slowdown in the economy?

GPIC has adopted a best in class methodology of process management systems and continuously strives to control the cost of production by adopting best practices. This helps GPIC to cope with a low oil price scenario and ongoing unpredictable global economic conditions, and enables GPIC to continue to be a profitable company.