French firm places unsolicited offer

M Azizur Rahman | Published: July 26, 2015 00:00:00 | Updated: November 30, 2026 06:01:00

France's Technip has placed an unsolicited offer to build Bangladesh's second refinery with the capacity of 3.0 million tonnes per year.
If and when built the refinery would help treble the country's refining ability.
It has placed the offer to the state-run Bangladesh Petroleum Corporation (BPC) by arranging finances for the project, a senior BPC official told the FE Saturday.
The refinery project costs over US$1.0 billion.
China Huanqiu Contracting and Engineering Corporation (Hqcec), a subsidiary of state-owned China National Petroleum Corporation (CNPC), and Kuwait Petroleum International (KPI), a subsidiary of the state-run Kuwait Petroleum Corporation (KPC), had also shown interest in the project, he said.
In the latest proposal, the French company also offered to arrange US$ 600 million in French credits and help collect the remaining amount from other commercial sources.
Implementation of the project would enhance the country's total crude-refining capacity to 4.5 million tonnes per year from the current 1.5 million tonnes.
"Technip has proposed that the government of Bangladesh provide sovereign guarantee against the loans," said the official of the state-run Bangladesh Petroleum Corporation.
Bangladesh usually provides sovereign guarantee for implementing public-sector projects inside the country.
A consortium of three French companies led by Technip had installed Bangladesh's sole 1.5 million mt/year crude-oil refinery in the port city of Chittagong. It started commercial operation way back in 1968 with a 30-year economic life.
The refinery, however, is still in operation with 97 per cent plant factor even after its economic life had expired over 15 years ago, said the BPC official.
The Chinese firm submitted the technical proposal to BPC after a series of meetings with top officials of the corporation and the Energy Division under the Ministry of Power, Energy and Mineral Resources. The proceedings are still under evaluation.
The Chinese firm initially offered in May to build the 3.5 million mt/year refinery on turnkey basis.
It has shown interest in building the refinery on buyer's credit with an interest rate of 2.7-2.9 per cent. The loan has to be repaid by Bangladesh within 15 years, with an initial three-year grace period, he said.
The company has also offered to carry out a feasibility study at US$2.2 million on building the refinery near Chittagong seaport.
Hqcec has assured of completing the feasibility study within a span of three to five months.
The KPI's proposal to build a crude-oil refinery with 10-million-tonne annual capacity worth US$ 6.0 billion is, however, currently suspended as it is now reviewing its Asia regional strategic plan afresh.
Officials said BPC's wholly-owned subsidiary Eastern Refinery Ltd (ERL), the operator of the lone 1.5-million-tonne-capacity Chittagong refinery, has moved separately to appoint a project-management consultant for a new 3.0-million-tonne plant adjacent to the existing refinery.
The ERL already received expressions of interest (EoIs) from several international firms, and after scrutiny, it has issued request for proposals (RfP) to five firms. The firms are KBR, WorleyParsons, Foster Wheeler, Fluor Daniel Eastern Inc, and Engineers Ltd, a senior ERL official said.
The RfP-submission deadline is July 30.
The project-management consultant will conduct a feasibility study for the refinery, decide on the plant's configuration and select an engineering, procurement and construction contractor, he said.
Officials said the government has tried to expand the refining capacity for the past several years to cut dependence on imports.
The country relies on imports to meet over 75 per cent of its demand for oil products.
The BPC has estimated that it needs to import 5.81 million tonnes of crude and refined oils in 2015, up 7.6 per cent from the 2014 mark.
mazizur.rahman@outlook.com