BPC to start talks to secure fuel supplies
The Bangladesh Petroleum Corporation (BPC) will begin talks with a number of international oil marketing companies next week on the terms contracts to import oil products to meet growing domestic demand in 2012, a senior company official said Friday, reports Reuters.
A team led by BPC Chairman Mohammad Abu Bakar Siddique is heading to Kuwait and Singapore to hold talks with Kuwait Petroleum Corporation (KPC), Emirates National Oil Company (ENOC), Malaysia’s Petronas, Egypt’s Middle East Oil Refinery and Philippines National Oil Company (PNOC), an official said.
“In Kuwait the team will discuss quantity and price details with KPC on Nov. 30-Dec. 1 and with other companies in Singapore on Dec. 2-6,” he said.
Bangladesh’s fuel oil imports are likely to more than double next year to around 1.65 million tonnes, while overseas purchases of diesel may rise about 25 per cent to 3.74 million tonnes on growing domestic demand, a senior BPC official told the Reuters this week.
Besides diesel and fuel oil, Bangladesh will import 385,000 tonnes of jet fuel, 100,000 tonnes of 95-octane gasoline and 90,000 tonnes of kerosene in 2012, the official said.
In 2011, the BPC paid a premium of $3.14-$3.30 a barrel to Middle East spot quotes for diesel and $31.50-$32.00 a tonne to Singapore spot quotes for 180-centistoke (cst) fuel oil.
Bangladesh also buys fuel oil from Vietnam’s Petrolimex, PetroChina and Maldives National Oil Company.
The state-owned company is likely to face higher prices for 2012 supplies, compared to 2011, as fuel prices have been on the rise, traders said.
Spot cargo premiums for fuel oil have been holding at strong levels of above $12.00 a tonne, while Asian refiners have been selling 2012 term cargoes for gasoil at firmer price levels.
Domestic demand for fuel oil has been swelling as a shortfall of natural gas supply forced the country to turn to costly oil-fired quick rental power plants. The chronic electricity shortage has limited economic growth and investments in Bangladesh and often stirs public fury.
However, the move to import has put more pressure on the country’s balance of payments and inflated the government’s subsidy bill.
The government heavily subsidizes BPC, the country’s sole oil importer and distributor, which sells fuel oil to the local market at much lower rates than import prices.
The total subsidy for the year to June 2012 is forecast to jump to around 460 billion taka ($6 billion) or 5 per cent of gross domestic product, more than double than the original estimate of 200 billion taka, and up from 195 billion taka the previous year.