Bahrain's Arabian Sugar Company, which came on stream in February, sees room for more refining capacity in the Middle East and North Africa to fill a 7.5 million tonne supply gap.

"The region is still short of refining capacity," Yves el-Mallat, chief executive officer of the refinery told Reuters.

Mallat said the Middle East and North Africa region is expected to consume 12.5 million tonnes of white sugar in 2014, with an annual rise in consumption of around 3 to 4 percent.

"If you accumulate the total production in this part of the world you will not exceed 5 million tonnes and this is where we come in," he said.

The refinery, situated in Bahrain's Industrial Investment Park, will reach full production capacity of around 600,000 tonnes a year, in early 2015.

Substantial new sugar refining capacity is expected to come on stream in the next few years with projects planned in Oman, Yemen, Saudi Arabia and Iraq.

"All these plants will produce on average around 600,000 tonnes or slightly more each so there is still room for growth," Mallat said.

The Arabian Sugar Company currently produces 900 to 1,000 tonnes a day and will produce 1,800 to 2,000 tonnes a day when production ramps up.

Bahrain's local consumption is around 50,000 tonnes a year but the factory is focused on exports with the bulk going to Saudi Arabia and Iraq and the rest to Qatar, Kuwait and Jordan.

"Bahrain is a small market and we can't deal with each client taking 100 to 200 tonnes separately, we are waiting until one or two major clients cluster together and take their needs," Mallat said.

Around 40 percent of production is exported to Iraq, and another 40 percent to Saudi Arabia.

Mallat said he had no plans to export outside of the Middle East region as transport costs would make deals unattractive.

"If you add transport prices, it would not be workable," he said.

"In this part of the world we are exporting mostly by roads, the only exception if Iraq to which we are using ships, land transport is much more feasible and prices are much better than what you follow in other markets," he said.

ASC sources all its raw sugar from Brazil, shunning Indian sugar because of quality issues.

"From India we are not sure about the consistency of the quality," Mallat said.  - Reuters