Kuwait and Bahrain set up commercial fuel arms after increasing refining capacity

The state-owned energy companies of Middle Eastern oil producers Kuwait and Bahrain are setting up fuel trading arms to sell the higher volumes of diesel and jet fuel they are producing due to expanded refining capacity.

Kuwait Petroleum Corporation (KPC) and Bahrain’s Bapco Energies plan to increase foreign fuel sales and launch trading activities in Dubai by early 2025, company officials said at an energy conference in Fujairah, United Arab Emirates ( UAE), reports Bloomberg.

Bahrain’s Bapco Energies plans to use its trading arm to more actively manage sales of petroleum products and adapt to current market forces, the company’s executive vice president for business development Shaikh Ebrahim Al Khalifa said, according to Bloomberg.

Bahrain plans to increase its diesel sales to Europe, the executive added.

Earlier this year, Bapco Energies began a partnership with TotalEnergies, under which the French supermajor will support Bapco Energies in the optimization of its Sitra refinery, which is currently being upgraded, and in the marketing of its petroleum products.

For its part, Kuwait’s KPC is looking to tap more international markets after launching full operations at its new Al-Zour refinery in recent months.

The new facility, one of the largest crude oil processing plants in the Middle East, is operated by Kuwait Integrated Petroleum Industries Company (KIPIC).

The refinery, which KIPIC says is the world’s largest core refinery with a capacity of 615,000 bpd, began ramping up operations in 2023 after being commissioned the previous year. The refinery has high flexibility as it is designed to process various types of crude oil from Kuwait, including Kuwait Heavy Crude (KHC), which will be produced under KPC’s upstream strategy.

The planned expansion of fuel trading in Kuwait and Bahrain emulates similar moves in the past by Saudi Aramco, the UAE’s ADNOC and Oman’s OQ.

But the timing coincides with a decline in refining margins globally amid tepid demand and massive new refineries starting up in the Middle East, Asia and Africa.

By Tsvetana Paraskova for Oilprice.com

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