Bangladesh ‘looks unable’ to take advantage of low oil price

Bangladesh is unlikely to be able to take advantage of the declining oil price in the global market for lack of its additional storage capacity.

The global coronavirus pandemic has caused oil price to come down to its lowest level in the last 30 years as Brent crude oil was selling at $20.49 on 26 April.

According to official sources, state-owned Bangladesh Petroleum Corporation (BPC) has taken a move to store some extra petroleum fuel by purchasing it at a lower price from the international market.

As part of the move, it approached to nine private companies to use their storage facilities on rental basis to store the imported fuel. Currently, these companies use their storage for petroleum fuel either to run their power plants or refinery business.

Only three of the companies — United Group, Super Petrochemical and the Synthetic Regen — responded to the government’s offer to rent out their storage, Syed Mehedi Hasan, director (operations) of BPC, told the news agency.

The BPC director also said a committee is now working to check out whether the storage facilities are up to the mark and can fulfil the BPC’s requirement.

These three companies have the preserving capacity of about 100,000 tonnes of petroleum fuel, said Mehedi.

Of them, the United Group’s is the biggest one having the capacity of over 50,000 tonnes while Synthetic has 46,000 tonnes and the Super Petrochemical has 7,500 tonnes preserving capacity.

BPC officials, however, said preserving petroleum oil with these private facilities will depend on their rental charge.

“If the rental charge is found to be cost effective, only then the BPC will move to use them for preserving extra oil,” said a BPC top official.

They said the BPC has currently has a storage capacity of 950,000 tonnes of petroleum fuel which can meet about 60 days’ requirement.

BPC sources said Bangladesh annually imports 5.5 million tonnes of petroleum fuel as its daily consumption demand is 15,000 tonnes.

But due to the shutdown of factories, public transport and airlines in compliance with the government order to prevent the spread of coronavirus, the consumption rate has declined by more than 60 per cent.

Official sources said the BPC has been trying to preserve some extra fuel in lighterage in offshore areas by purchasing the fuel at a lower price to take advantage of the declining fuel price.

“But it won’t be a very viable option for BPC as it’ll cost huge,” said an official at the organisation.

Chattogram Customs House data shows that the BPC imported some 679,000 tonnes of diesel and 330,000 tonnes of crude oil in between January and 23 April this year.

During the same period last year, 107,100 tonnes of diesel and 369,000 tonnes crude oil were imported by the BPC.