Energy Department: Oil Supply Stable Amid Production Dip

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CHATTOGRAM – Bangladesh’s sole state-owned oil refinery, Eastern Refinery Limited (ERL), is operating at reduced capacity following disruptions to crude oil imports caused by the ongoing conflict in the Middle East. Despite the slowdown, the Ministry of Power, Energy and Mineral Resources assures the nation that there will be no adverse impact on fuel supply, as refined fuel imports have been secured from alternative sources.

The operational adjustment at ERL stems from the non-arrival of scheduled crude oil shipments in March due to the closure of the Strait of Hormuz, which began on February 28 after the outbreak of conflict in the Middle East. While ERL typically plays a crucial role in ensuring a continuous fuel supply, the government has proactively secured sufficient refined fuel imports to compensate for the current crude oil shortfall.

The Energy Division confirmed that the conflict has prevented the delivery of 200,000 tons of crude oil in March and another 100,000 tons slated for April. A Saudi Arabian shipment of 100,000 tons, the first cargo for March, remains stranded at Ras Tanura port as its vessel, Nordix Pollux, could not traverse the Strait of Hormuz due to security concerns. A second March shipment from the United Arab Emirates was also postponed.

However, the government has moved swiftly to mitigate these challenges. A vessel carrying 100,000 tons of Arabian Light Crude departed around April 20 via an alternative route and is anticipated to arrive at Chattogram port between May 2 and 3. Furthermore, Saudi Arabia has been requested to supply an additional 100,000 tons of crude oil in May, and the cabinet has approved the direct purchase of 100,000 tons of crude to meet emergency demands.

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ERL primarily refines Arabian Light Crude Oil (ALC) from Saudi Arabia and Marban Crude Oil from the United Arab Emirates, contributing approximately 20% of the country’s annual fuel requirements with an annual refining capacity of 1.5 million tons. Under normal circumstances, ERL imports one to two crude oil cargoes monthly to maintain its production, with the remaining national demand met through refined fuel imports.

For the 2024-25 fiscal year, ERL supplied around 15% of the total diesel consumed in Bangladesh and approximately 12% of the petrol demand. While it did not supply any octane, the refinery also produces significant quantities of furnace oil, kerosene, and bitumen as valuable by-products.

The Energy Division reiterated that the government’s strategy involves compensating for the disrupted crude oil imports by ensuring an ample supply of refined fuel. This approach effectively addresses the deficit from ERL while allowing the refinery to maintain limited production.