Plan to treble crude oil refining capacity by June, 2018

---

M Azizur Rahman The government has taken up a plan to double the country's crude oil refining capacity to 3.0 million tonnes per year by June, 2017 and treble it to 4.5 million tonnes by June, 2018 from the existing 1.5 million tonnes per year, a senior energy ministry official said Wednesday. He said the Energy Division under the ministry of power, energy and mineral resources detailed out the plan in the mid-term budgetary framework for the period, until fiscal year (FY) 2017-18. The country's crude oil refining capacity is required to be enhanced to meet the mounting demand in the years to come, the official said. As part of the country's planning to augment crude oil refining capacity, the state-owned Bangladesh Petroleum Corporation (BPC) will set up a second refinery, with a capacity of 3.0 million tonnes per year, near the existing refinery -- Eastern Refinery Limited -- a senior BPC official said. The BPC has been trying to arrange necessary funds and engage global companies to build the plant at an estimated cost of $1.2 billion, he said. Its subsidiary ERL -- located near Chittagong seaport -- has the capacity to refine 1.5 million tonnes of crude oil per year. Several Chinese firms including an affiliate of state-owned China National Petroleum Corporation, China Huanqiu Contracting and Engineering Corporation, or Hqcec, and Wuhuan Engineering Company are in talks to build the country's second refinery unit near the ERL. Besides, the BPC is negotiating with Kuwait Petroleum International to set up a joint venture refinery with a capacity of 4.0 -5.0 million tonnes per year. The BPC official did not say the exact time as to when the new refineries would come online but said the country's refining capacity would be enhanced gradually in the process of implementation of these projects. The BPC official expressed the hope that building of the new refineries would reduce the state-owned company's import costs by around Tk 7.0 per litre (9 cents/litre). Separately, it is building 14 new oil storage tanks with a total capacity of 100,000 tonnes to be completed by 2014 to increase the country's current overall fuel storage capacity from 894,000 tonnes and avoid paying demurrage on delays in discharging oil products. The BPC is building these new oil storage tanks to meet the mounting demand for oil imports, both crude and refined products. Bangladesh's oil demand has surged after it launched a drive to increase the number of oil-based power plants in the country from mid-2010 to counter the impact of fast-depleting domestic natural gas resources, commissioning over three dozens new oil-based rental power plants by 2013. The BPC's import next fiscal will include 5.67 million tonnes of crude oil and refined products, up 11.17 per cent from estimated imports of 5.1 million MT in the current one. In the upcoming fiscal, the BPC is setting its target to import 1.4 million tonnes of crude, 3.0 million tonnes of diesel, 1.0 million tonnes of furnace oil and a combined 267,000 tonnes of kerosene, jet fuel and octane, the official said.