Oil on hand is running out, production is slowing

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The country’s only state-owned oil refinery, Eastern Refinery Plc, has been forced to reduce production as crude oil imports are blocked due to the Iran war. Related sources say that the oil in hand is running out fast. In the current scenario, production could be completely stopped in another week.

The refinery located in Patenga of Chittagong has been supplying various fuels including diesel, petrol, octane to the country by refining ‘Arabian Light Crude’ of Saudi Arabia and ‘Marban Crude’ of United Arab Emirates. Two ships were supposed to arrive last month from these two countries. But as the two ships got stuck due to the war, the pressure on production increased.

Eastern Refinery is a subsidiary of Bangladesh Petroleum Corporation (BPC). Chairman of BPC about the production situation. Rezanur Rahman told Prothom Alo, “Production is being disrupted due to non-arrival of oil.” It has not been completely closed yet, but it may have to be closed in a few days. He said that an initiative has been taken to bring one lakh tons of crude oil from Malaysia. But the concerned supplier has not yet deposited the security deposit (PG). As a result, there is uncertainty about the arrival of new shipments this month. But a ship is likely to reach the country early next month.

According to BPC and refinery sources, the crude oil storage capacity of the refinery is about 2 lakh 25 thousand tons. Before the start of the war, there were about 150,000 tons in stock. However, as of April 1, usable stock fell to 19,000 tons. Out of this, there were about 33 thousand tons of oil, which is not usable under normal conditions. This part is considered as ‘deadstock’.

Amidst the crisis, around 5,000 tonnes of crude oil in the tanks of the ‘Single Point Mooring (SPM) project was brought to the refinery recently. In total, there are about 25 thousand tons of usable stock at present. Although there is a capacity of about 4,500 tons of oil per day, the production has been gradually reduced to 2,500 to 3,000 tons due to lack of new shipments.

Two responsible officials of BPC and the refinery told Prothom Alo that, if necessary, oil from deadstock is also being refined. In this, the production is being continued outside the normal process. At the current production rate, this stockpile may be able to operate for about another week.

On March 2, a ship got stuck due to war while taking oil at Ras Tanura port in Saudi Arabia. Crude oil was picked up on March 3 by the vessel named ‘Nordic Poluks’. Later it departed but it returned to Ras Tanura Terminal due to unfavorable conditions. It’s still stuck there.

On the other hand, 100,000 tons of oil was supposed to be brought from Abu Dhabi National Oil Company (ADNOC) of the United Arab Emirates last month. For this, Bangladesh Shipping Corporation made an agreement with a ship named ‘MT Omera Galaxy’. However, the shipping company canceled the contract. ADNOC has proposed to take oil from Fujairah port instead of Jebel Dhana port. Although it is possible to avoid the Strait of Hormuz, import costs will increase.

As per the pre-scheduled schedule, 100,000 tonnes of oil is scheduled to arrive from Ras Tanura port in April as well. As an alternative, arrangements are being made to take oil from Saudi Arabia’s Yanbu port. However, in this case, there will be an additional cost of zero and 25 dollars per barrel, BPC officials said.

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BPC officials say that efforts are underway to bring the stranded ship to the country by alternative means. However, despite the ceasefire, the situation is still not normal. Due to this, it cannot be said for sure when it will be possible to bring oil.

After the joint attack of the United States and Israel on Iran on February 28, the conflict spread across the Middle East. Shipping through the Strait of Hormuz, the main route for transporting energy from the Persian Gulf region, was virtually halted. The import of Bangladesh is also in the face of uncertainty. Despite the cease-fire on April 8, shipping using the Strait of Hormuz has not been normal.

Let’s take a look at the import structure to understand the impact of a production shutdown. In the last financial year 2024-25, BPC imported 62 lakh 15 thousand tons of fuel oil at a cost of Tk 50 thousand 195 crores. Of this, crude oil was 15 lakh 10 thousand tons, i.e. about 24 percent. The remaining 76 percent was refined oil, which was directly usable.

In this reality, the country’s energy supply is now heavily dependent on imported refined oil. As a result, even if the production of the Eastern Refinery is temporarily stopped, there is little risk of a major crisis in fuel such as diesel or furnace oil.

However, according to refinery sources, by refining one lakh tons of crude oil, about 40 thousand tons of diesel, 15 to 20 thousand tons of gasoline and octane and about 30 thousand tons of furnace oil can be produced. As a result, a significant portion of gasoline and octane is still dependent on domestic refineries. If this production is shut down for a long period of time, there may be pressure on transport and consumer level.

In this situation, the government is trying to maintain normal supply by relying on imported refined oil for now. When asked, State Minister for Power, Energy and Mineral Resources Anindya Islam told Prothom Alo that a few ships with refined oil have already arrived in the country and more shipments are on the way. Initiatives have also been taken to increase supply from alternative sources.

The state minister said that an agreement has been signed with an organization named Petrogas International to import diesel, which is supposed to start supplying this month. Besides, separate measures have been taken to ensure octane supply. 25,000 tonnes of octane arrived at the beginning of the month, with an equivalent amount expected to arrive at the end of the month.

Regarding crude oil, the state minister said that the main route to bring crude oil is the Persian Gulf. This oil comes through the Strait of Hormuz. So far no oil has arrived. But the government is trying to get oil through alternative means.