Kuwait Petroleum Corporation (KPC) is learnt to have pleaded its inability to supply 500ppm low-sulfur diesel although all other exporters agreed on Bangladesh's option for importing such cleaner fuel from next January to keep the environment cleaner.
A senior official said all other international diesel suppliers save the petroleum corporation of the gulf state have confirmed to Bangladesh Petroleum Corporation (BPC) their decision to start providing 500ppm diesel from January 2015.
Some of the suppliers confirmed in writing, while some others verbally, to initiate the supply of diesel with 0.05 percent sulfur content-also known as 500ppm-sulfur diesel-from day one of the next calendar year, BPC Chairman Md Eunusur Rahman told the FE.
This low-sulfur diesel replaces the supply of diesel with 0.25-percent sulfur.
But, the major gasoil supplier, KPC, which has been supplying around 1.0 million tonnes of diesel with 0.20 percent sulfur over the past several years, has expressed its inability to supply 500ppm diesel from January, Mr Rahman said.
The Kuwaiti supplier requires some more time to initiate supplying the cleaner 500ppm-sulfur diesel, he quoted a KPC official as saying.
But the BPC official could not confirm from when KPC would start supplying the cleaner gasoil.
"We have a scheduled meeting with KPC next month, where we shall discuss it elaborately to decide on future course of action," Rahmad said.
KPC has argued that it supplies 0.20-percent-sulfur diesel from its own refinery and to upgrade the quality of gasoil for Bangladesh it would be required to make some changes of machinery in the refinery. And it requires time.
He said although KPC produces upgraded diesel from its refinery, the output is bound for other countries under long-term deals.
BPC had earlier decided that it will import diesel with 0.05-percent-sulfur content, instead of 0.20-0.25 per cent from next calendar year in line with instructions from the Ministry of Environment and Forests.
BPC is Bangladesh's sole importer of diesel and has term deals with Kuwait Petroleum Corporation, Petco, the trading arm of Malaysia's Petronas, Emirates National Oil Company, or ENOC, PetroChina, Vietnam's Petrolimex, and Unipec Singapore.
The corporation currently imports around 3.5 million tonnes of 0.20-0.25 percent diesel to meet the domestic demand.
Importing the lower-sulfur gasoil might lead to higher import costs of around 40-60 US cents per barrel, Rahman said.
Apart from diesel, BPC imports 180 CST high-sulfur fuel oil (furnace oil), A-1 jet fuel, 95 RON gasoline (octane) and superior kerosene.
But BPC has yet to decide on the upgrading of other petroleum products apart from gasoil, he added.
Separately, BPC also imports around 1.4-million-mt crude oil from Saudi Aramco and Abu Dhabi National Oil Company every year for refining in its sole Eastern Refinery situated in Chittagong.
BPC borrows money from International Islamic Trade Finance Corporation, the lending arm of the Islamic Development Bank Group, to meet the major cost of petroleum imports.
BPC purchases oil products from the international market and sells most of them at lower rates on the domestic market, resulting in losses-and hence government subsidy to recompense.
Currently, BPC is incurring loss of around Tk 10 per litre against gasoil trade.
azizjst@yahoo.com
