Kuwait Petroleum International (KPI), a subsidiary of the state-run Kuwait Petroleum Corporation (KPC), has 'suspended' its plan of constructing a crude oil refinery with 10 million tonne per year capacity and worth US$ 6.0 billion in Bangladesh.
The company in question is now reviewing its Asian region strategic plan afresh, industry insiders said.
KPI informed its latest position to the state-owned Bangladesh Petroleum Corporation (BPC) last week, when it rejected a BPC proposal for facilitating an official visit led by State Minister for Power, Energy and Mineral Resources (MPEMR) Nasrul Hamid in connection with the proposed project.
KPI requested the BPC to 'suspend' the proposed project until it completes reassessment of its Asian region strategic plan, a senior BPC official told the FE on Monday.
Industry insiders said drastic fall in price of Brent crude, the benchmark for international oil price, might have prompted KPI to 'halt' the multi-billion dollar project for now.
The price gradually fell by more than 50 per cent in the past several months to around $50 per barrel this month from around $120 per barrel in September 2014.
A KPI delegation headed by its President and Chief Executive Officer (CEO) Bakheet Al Rashidi visited Bangladesh in October 2014, expressing its interest to build the crude oil refinery. It was also planning to carry out a feasibility study over the refinery project.
During the visit KPI informed BPC that a refinery with 300,000 barrel per day capacity would be a standard one. But its capacity should not be less than 200,000 barrel per day for economic viability, said a BPC official.
It might require a minimum investment of over $6.0 billion to build a 200,000 barrel per day refinery, they estimated.
KPI wanted that the refinery must have options for future expansion to cater the growing petroleum demand in the country as well as in the region.
The Kuwaiti firm was eyeing to build a complex refinery to convert less valuable petroleum output to valuable one, the official also said.
The refinery project was planned for either a joint venture with BPC or KPI alone could build it with its international partners.
KPI wanted that the government of Bangladesh provide all necessary infrastructures, like land, electricity, fresh water, and roads and communication, to the project site. It also wanted tax holiday for the project and 100 percent profit repatriation.
Before talking with BPC officials, KPI carried out an initial survey over its planned refinery installation, scrutinizing Bangladesh's oil import trend, demand supply status, and source of imports etc.
It also took note of South Asian region's oil import and consumption pattern to see whether the planned refinery could serve to regional demand, he added.
Currently Eastern Refinery Ltd (ERL), the country's lone refinery and a wholly-owned subsidiary of BPC, has a plant with 1.5 million tonne per year capacity, which can refine 1.4 million tonne crude per year at its de-rated capacity.
BPC wrote letters to both KPC and KPI in March 2012, inviting them to set up an oil refinery plant in Bangladesh.
mazizur.rahman@outlook.com
