Bangladesh resumes gasoil imports from India's IOC after three-year hiatus

Bangladesh Petroleum Corp. has received a gasoil cargo from India's state-owned Indian Oil Corp. after a three-year hiatus, a senior BPC official told S&P Global Commodity Insights March 8, on condition of anonymity.

State-run BPC has inked a deal with IOC to supply around 333,000 mt of 0.005% sulfur gasoil, 40,000 mt of jet A-1 fuel and 20,000 mt of 95 RON gasoline until December 2023, the BPC official said. The oil products will be supplied through waterborne vessels.

IOC had previously supplied around 430,000 mt of 0.005% sulfur gasoil, 50,000 mt of jet A-1 fuel and 30,000 mt of 95 RON gasoline over July-December 2020 after being awarded a BPC term tender. Typically, BPC floats term tenders twice every calendar year to secure refined oil products imports over January to June and July to December.

With the inclusion of IOC, BPC has nine listed suppliers of refined oil products under government-to-government arrangements including Kuwait Petroleum Corp, Malaysia's Petco Trading Labuan Company, Dubai's Emirates National Oil Company, China's PetroChina, Indonesia's PT Bumi Siak Pusako, China's Unipec, Thailand's PTT International Trading and India's Numaligarh Refinery Ltd (NRL).

BPC to import gasoil from India via cross-border pipeline

BPC is also set to import 0.005% sulfur gasoil from India via the maiden India-Bangladesh Friendship Pipeline from mid-March, BPC chairman ABM Azad told S&P Global earlier.

The cross-border oil pipeline stretches 125 km through Bangladesh and 5 km through India, passing through Panchagarh, Nilphamari and Dinajpur to the Parbatipur oil storage facility in Bangladesh. Once the pipeline is in operation, Bangladesh will cease imports of gasoil via railway from India.

"Construction of the pipeline, which began in early 2020, has already been completed and the facility is now waiting to be commissioned to carry gasoil from India," Azad said.

The commissioning date of the pipeline is slated for March 18. Indian Prime Minister Narendra Modi and Bangladeshi Premier Sheikh Hasina are expected to inaugurate operations of the pipeline jointly through videoconferencing, he added.

Currently, Bangladesh imports around 2,200 mt/month of 0.005% gasoil from NRL via the West Bengal Railway and then the Bangladesh Railway to Parbatipur oil depot in the country's north.

Gasoil imports via the pipeline will be cheaper and more efficient than rail supplies, Azad said.

BPC will purchase 0.005% gasoil from NRL for 15 years at a negotiated premium of $5.50/b to the Mean of Platts Arab Gulf gasoil assessment on a CFR basis for delivery via the pipeline, he said.

The pipeline is likely to initially carry around 250,000 mt/year of gasoil under the agreement between the two countries, the official said. The volume will gradually increase to 400,000 mt/year during the first five years and may subsequently increase to around 1 million mt/year, Azad said.

Gasoil import volumes may also be adjusted periodically based on the country's demand, and imports may be extended beyond the agreed 15 years subject to mutual discussion, he added.

Refined product imports to increase

BPC expects to import around 7.69 million mt of refined products in 2023, up 18.3% from 6.5 million mt in 2022. This will comprise around 5.31 million mt of 0.005% sulfur gasoil, 700,000 mt of Jet A-1 fuel, 600,800 mt of 95 RON gasoline, 900,000 mt of high sulfur fuel oil with 3.5% sulfur and 180,000 mt of 0.5% sulfur marine fuel, the BPC official said.

BPC will source around half of its total refined oil through the international tendering system and the remaining half through government-to-government negotiations with state-run oil suppliers across the world.

Bangladesh's state-run oil corporation usually floats tenders twice in every calendar year to import its refined oil products during January to June and July to December period to fix premium rates.

It also enters negotiation with the selected suppliers twice to fix the petroleum prices.