Saudi Aramco wants to build crude oil refinery in BD

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M Azizur Rahman Oil-rich Saudi Arabian Oil Company -- Saudi Aramco, has shown interest in building a crude oil refinery plant in Bangladesh at a cost of around US$ 2.5 billion, a top government official said Saturday. He said the Saudi firm has placed a proposal to the Economic Relations Division (ERD) to build the refinery at a suitable location. Capacity of the planned refinery will be 7.0-8.0 million tonnes per year, five times larger than the local crude oil refinery, said the official. The state-owned Eastern Refinery Ltd (ERL) can refine only 1.4 million tonnes of crude oil per year. Saudi Aramco is interested to provide a portion of the refined petroleum in local market and the remaining for export to overseas countries, said the official. The ERD has recently informed the energy ministry of the Saudi firm's intention to build a refinery in the country. Saudi Aramco has sought Bangladesh government's opinion over its planned investment proposal as early as possible. "We have received the Saudi Aramco's proposal recently over building an oil refinery plant at its own cost," a senior energy ministry official said. He said the ministry is now scrutinising the Saudi proposal and will inform its decision soon. Saudi Aramco is a regular crude oil supplier of state-owned Bangladesh Petroleum Corporation's (BPC) subsidiary Eastern Refinery Ltd. It has already imported around 518,000 tonnes of crude oil from Aramco until September, 2011. Apart from Saudi Aramco BPC is also importing crude oil from UAE's ADNOC. BPC has imported 382,000 tonnes of crude oil from ADNOC to refine in ERL until September, 2011and planned to import 700,000 mts of Arab Light crude from Aramco in 2012. BPC will require importing 1.4 million tonnes of crude oil in 2012, up by 12 per cent from 2011 imports of 1.25 million tonnes. BPC, which typically imports 1.4 million mts of crude oil per year from the two Middle East producers, is only importing 1.25 million mts of crude this year due to a 45-day scheduled maintenance. BPC has projected that it will require to import around 6.50 million tonnes of refined petroleum products in fiscal year 2011-12 (July-June), up by 27.45 per cent from previous fiscal year's (2010-11) 5.10 million tonnes. The state-owned corporation will require around taka 460 billion (US$ 6.21 billion) to import petroleum products in 2011-12, up by 53 per cent from the previous fiscal year's taka 300 billion, BPC has projected. BPC imported around 3.8 million petroleum products in 2009-10 fiscal year. Country's petroleum import is growing rapidly as the country's oil demand is mounting as the government is diversifying its fuel sources for electricity generation by setting up dozens of diesel and furnace oil-fired power plants to cut the country's over dependence on natural gas for electricity generation. Petroleum demand in the country's industrial and transport sector is also increasing coping with the country's sustained overall GDP growth of around 6.0 per cent, which the country is maintaining in the past one decade. BPC is now in acute fund crunch to import increased quantity of petroleum products to meet the local demand. BPC has been seeking additional funds from the International Islamic Trade Finance Corporation, the lending arm of Islamic Development Bank Group, to pay mounting import bills. It has also arranged a deferred payment scheme for its refined oil product purchases from Petronas and PNOC. Officials said country's import costs may reduce substantially if it meets demand of mounting petroleum products from the planned refinery of Saudi Aramco. BPC may have also a stake into Aramco's planned refinery plant, if it builds the plant. BPC currently has oil import deals with Kuwait Petroleum Corporation, Malaysian state-owned Petronas unit Petco, Philippine National Oil Company (PNOC), Emirates National Oil Company, Egypt's Middle East Oil Refinery, Maldives National Oil Company, PetroChina, Indonesia's Bumi Siak Pusako and Vietnam's Petrolimex.