BPC plans to carry fuel oil through pipelines (The Financial Express (Bangladesh))

Bangladesh Petroleum Corporation (BPC) has initiated projects to set up efficient and cost-saving unloading and transportation facilities for petroleum (both crude and refined oil). The import of liquid petroleum product has been steadily increasing in the country. With the increased demand for oil in the power, industry and transportation sectors, import of petroleum will also increase in future.

The Bangladesh Petroleum Corporation (BPC) in the FY 2014-2015 imported 1.297 million tonne of crude oil and 4.095 million tonne of refined oil of which 63 per cent is diesel oil. BPC spent Tk 269,408.5 million (26940.85 crore) for importing 5.392 million tone of oil during the fiscal year 2014-2015.

BPC’s subsidiary, The Eastern Refinery Ltd. (ERL), a subsidiary of BPC, has the installed capacity to refine 1.5 million tonne of crude oil annually and it refined 1.25 million tonne of crude petroleum during 2014-2015.

The natural gas fields produced 2,883,215 barrel condensate as byproduct of natural gas production during 2014-2015. Part of the produced condensate was sold to ERL and other private companies. The Gas Fractionation plants at Rashidpur Gas field (installed capacity 3,750 barrel/day) and in the other Petrobangla companies (FGFL, BGFCL, RPGCL) processed 1,563,572 barrels of condensate during the same period and delivered 897,866 barrel of petrol, 543,153 barrel of diesel and 184,477 of kerosene to the domestic market through BPC’s subsidiary marketing companies.

BPC through its subsidiary marketing companies distribute petroleum products in the country, 90 per cent of which are carried by coastal and inland water tankers. The balance 8 per centis carried by rail, and 2 per cent by road transports. The majority of these oil transport tankers and lorries are owned by private entrepreneurs.

The demand for liquid petroleum in the country in 1972 was only 0.848 million tonne of petroleum including 0.109 million tonne or diesel. Presently BPC not only imports around 5.4 million tone of oil but also has established storage capacity for 1.162 million tonne of oil. The government plans to enhance the oil storage capacity to 1.3 million tonne within 2016.

Bangladesh imports crude petroleum from the Kingdom of Saudi Arabia (KSA) and United Arab Emirates (UAE) under government-to-government contracts. On the other hand, refined liquid petroleum (diesel, furnace oil, jet oil, octane) are imported from Kuwait, UAE, Egypt, Malaysia, Philippines, China, Vietnam and Indonesia. As the draft limitation does not allow big ocean-going vessels to enter into the Chittagong port jetty, BPC requires to use the small lighterage vessels (with 20,000 MT capacity) to unload the petroleum products from the big tankers (for crude petroleum 100,000 MT+ capacity and refined oil with 30,000 MT+ capacity vessels) at the outer anchorage (for crude oil at Kutubdia outer anchorage and for refined oil at Patenga outer anchorage) and lighter them to Chittagong port oil jetty. It is common knowledge that the bigger the size of oil tanker vessel, lesser the cost of transportation provided the tanker vessel can reach and unload oil at the port jetty directly. The existing mechanism of fuel oil delivery is time-consuming and costly but BPC has no other option at this stage due to the Chittagong port’s draft restrictions for bigger vessels to allow them to the port.

To make a difference, BPC has taken a project titled ‘Installation of Single Point Mooring (SPM) Project’ at an estimated project cost of Tk 55,060 million (5,506 crore) to ensure efficient handling of imports of liquid fuel by avoiding huge logistics for ship movements in Chittagong port and development of a long-term stable infrastructure there. Once the SMP project will be implemented, a floating buoy/jetty will be installed near Kutubdia Island of Cox’s Bazar, about 90 km off the Chittagong port and 10 km off Maheshkhali Island. From the floating jetty crude and refined oil (diesel) will be unloaded at six storage tanks to be installed at Maheshkhali Island; subsequently, through pipelines, oil will be supplied to ERL and to the petroleum distribution companies’ installations. This project may reduce the unloading period for imported crude petroleum products to two days from the present 10-14 days and to 10 hours from the present requirement of 107 hours for refined petroleum from the big vessels respectively. As a result, transit loss will be reduced significantly.

The Financial Express ( August 09, 2015) reports further that BPC is planning to build another pipeline for carrying refined petroleum products from Chittagong to Dhaka. China Petroleum Pipeline Bureau (CPPB), a subsidiary company of the Chinese state-owned China Petroleum Corporation, has submitted an unsolicited proposal to BPC to build the country’s first 250-km-long refined petroleum carrying pipeline between Dhaka and Chittagong. As reported, this Chinese firm has submitted offer to BPC for building a single-point mooring system (SPM) to carry imported petroleum from the offshore unloading point to the ERL and onshore storage facilities. The Dhaka-Chittagong petroleum pipeline has been planned to carry mainly diesel from Chittagong tank terminal to Godnail tank terminal at Narayanganj. The government has a further plan to build a separate pipeline to carry A-1 jet oil from Godnail tank to Hazrat Shahjalal International Airport.

If the proposed pipelines are built and made operational, BPC can save significant cost for petroleum transportation. Secretary, Energy and Mineral Resources Division disclosed to the media that the government had undertaken a project to build the 250-km-long fuel oil pipeline project between Chittagong and Dhaka at a cost of Tk 12,000 million (1200 crore) to save Tk 1300 million (130 crore) annually and to ensure fuel supply security. BPC has a plan to implement the said project within 2017.