ERL takes up large project to ensure energy security
Saturday, 17 July 2010
Sheikh Shahariar Zaman
Eastern Refinery Limited (ERL) has undertaken a nearly billion-dollar project to increase its capacity to provide the desired energy security and reduce petroleum product deficit in the country.
The ERL capacity will be increased to 4.5 million tonnes from 1.5 million tonnes per annum with total costs of $867 million, said a senior official of the refinery.
"We expect additional revenue of $220 million after the expansion by 2014 and the investment payback time will be less than five years," he said.
"It is a very lucrative project and we are looking for potential investors who will finance it," he added.
Many clients including local and multinational banks are showing interest to finance the project, the official said.
The country has a demand for 3.8 million tonnes of refined petroleum products per annum and 70 per cent of them are imported, with ERL supplying the rest 30 per cent.
"We could have taken up the project without looking for outside investors as the World Bank and Asian Development Bank have refused to finance the project," he said.
The project can be built on build-own-operate-transfer (BOOT), public- private partnership (PPP), finance-only or any other suitable option, he added.
In crude oil refining process, 14 by-products are produced including petrol, octane, diesel, jet fuel, furnace oil, bitumen and kerosene, another official of the ERL said adding, "All the by-products are sold in the market."
If the refinery can supply the imported 70 per cent refined petroleum products, the additional business revenue will stand at least $200 million, he said.
The refinery has already conducted a feasibility study on the project commissioning an international consultant, showing that it is a lucrative project, he added.
"We need the expansion to ensure energy security in the country and produce eco-friendly fuel," the official said.
There is a big price difference between prices of crude oil and refined oil and the potential investors or a consortium can make a good profit by investing in the project, he added.
"The financial and economic analyses reveal that $709 million will be needed in foreign currency and $158 million in local currency for the expansion project," the official said.
The ERL has already been working on a project to smoothly supply crude oil, which will have 77 kilometres of undersea pipeline constructed from Kutubdia to the refinery, he said.
The existing system of crude unloading is not sufficient as mother oil tankers do not come to Chittagong Port. Instead, they berth in the outer anchorage and light vessels ferry the crude oil from the tankers to the refinery, he added.
A floating platform will be built at Kutubdia, where the tankers can arrive, and through the undersea cables the crude will be supplied directly to the refinery, the ERL official said.
"After construction of the single-point mooring pipeline by 2012, about $10 will come down in freight cost per barrel," he said.
The total cost of the project is $136 million with Islamic Development Bank providing $129 million and the rest will come from the government, he added.
Eastern Refinery Limited (ERL) has undertaken a nearly billion-dollar project to increase its capacity to provide the desired energy security and reduce petroleum product deficit in the country.
The ERL capacity will be increased to 4.5 million tonnes from 1.5 million tonnes per annum with total costs of $867 million, said a senior official of the refinery.
"We expect additional revenue of $220 million after the expansion by 2014 and the investment payback time will be less than five years," he said.
"It is a very lucrative project and we are looking for potential investors who will finance it," he added.
Many clients including local and multinational banks are showing interest to finance the project, the official said.
The country has a demand for 3.8 million tonnes of refined petroleum products per annum and 70 per cent of them are imported, with ERL supplying the rest 30 per cent.
"We could have taken up the project without looking for outside investors as the World Bank and Asian Development Bank have refused to finance the project," he said.
The project can be built on build-own-operate-transfer (BOOT), public- private partnership (PPP), finance-only or any other suitable option, he added.
In crude oil refining process, 14 by-products are produced including petrol, octane, diesel, jet fuel, furnace oil, bitumen and kerosene, another official of the ERL said adding, "All the by-products are sold in the market."
If the refinery can supply the imported 70 per cent refined petroleum products, the additional business revenue will stand at least $200 million, he said.
The refinery has already conducted a feasibility study on the project commissioning an international consultant, showing that it is a lucrative project, he added.
"We need the expansion to ensure energy security in the country and produce eco-friendly fuel," the official said.
There is a big price difference between prices of crude oil and refined oil and the potential investors or a consortium can make a good profit by investing in the project, he added.
"The financial and economic analyses reveal that $709 million will be needed in foreign currency and $158 million in local currency for the expansion project," the official said.
The ERL has already been working on a project to smoothly supply crude oil, which will have 77 kilometres of undersea pipeline constructed from Kutubdia to the refinery, he said.
The existing system of crude unloading is not sufficient as mother oil tankers do not come to Chittagong Port. Instead, they berth in the outer anchorage and light vessels ferry the crude oil from the tankers to the refinery, he added.
A floating platform will be built at Kutubdia, where the tankers can arrive, and through the undersea cables the crude will be supplied directly to the refinery, the ERL official said.
"After construction of the single-point mooring pipeline by 2012, about $10 will come down in freight cost per barrel," he said.
The total cost of the project is $136 million with Islamic Development Bank providing $129 million and the rest will come from the government, he added.