IOCL resumes supplying petroleum products to BD

India's state-owned Indian Oil Corporation, commonly known as Indian Oil, has initiated supplying refined petroleum products to Bangladesh as a major supplier.

Indian Oil has already delivered 30,000 tonnes of diesel through a cargo and another cargo having similar capacity is expected to reach Chattogram by this month, a senior BPC official said.

This is the first oil supply of Indian Oil to state-run Bangladesh Petroleum Corporation, or BPC after 15 years.

Earlier, BPC imported around 400,000 tonnes of diesel from the IOCL during 2005-06.

Under the current deal, Indian Oil will supply 430,000 tonnes of diesel, 50,000 tonnes of jet fuel and 30,000 tonnes of octane during the July-December period of 2020 as it has been awarded a tender to supply fuel as the best bidder.

The Indian firm has entered the Bangladesh market with supplying cleaner diesel having 50 ppm, or parts per million, sulphur.

The BPC imported 500 ppm sulphur diesel until June. Specimens of other petroleum products, however, remain the same.

The BPC will import up to 1.040 million tonnes of 0.005 per cent sulphur gas oil, or diesel, jet fuel, furnace oil and octane combined through tender during the July-December period of 2020, which is 22.67 per cent lower than the second half of 2019.

The IOC offered the most favourable bid to supply almost half the total petroleum products to the BPC.

Officials said a separate proposal made by Indian Oil to supply around 60,000 tonnes of diesel annually is pending for approval.

The Indian oil company intends to supply fuel oil to the BPC's newly-built oil depot at Mongla, having a storage capacity of around 100,000 tonnes.

Bangladesh has been importing around 528,000 tonnes of diesel annually from Numaligarh refinery of Assam, owned by another state-owned Indian oil company, Bharat Petroleum Corporation Ltd, or BPCL, since October 2017.

For oil supplies to Mongla, the IOCL has offered to supply diesel at a premium rate of US$ 1.51 per barrel, if the petroleum product is imported on FOB (free on board) basis, meaning the BPC would have to bear transport costs.

The premium rate would be US$5.27 per barrel, if the petroleum product is imported on CFR basis, meaning the IOCL would have to carry the petroleum product to Mongla oil depot at its own expense.

The BPC then would have to pay fuel import cost as per the mean of Platts Arab Gulf, or MoPAG, a benchmark formula in fixing oil prices in the international market.

The IOCL has planned to use lighter vessels to transport fuel oil from its Haldia refinery of West Bengal to Mongla.

Currently, the BPC is carrying fuel oil from Chittagong oil depot to Mongla depot.

The BPC pays a premium rate of US$ 5.50 per barrel on CFR basis to import Indian diesel from Numaligarh refinery.

Indian diesel is being consumed by clients around Parbitupur localities.

To meet the domestic demand, BPC currently imports around 4.5 million tonnes of gas oil annually.