BPC shelves plan to rent private tanks to store oil

The Bangladesh Petroleum Corporation (BPC) has finally put off a plan of arranging private sector storage facilities on rental basis to store its oil.

The state-run corporation planned to store as much oil as it can to take benefit of the downward oil prices in international market.

The BPC's own storages are almost full now. If it could store more oil in private tanks, it could purchase more oil products at current low price from international market, said a senior official.

The BPC initiated the process to get private tankers on rental basis for four months.

"If we could get the tanks, it could be more beneficial," said BPC director for operations and planning Syed Mahdi Hasan.

Despite repeated attempts to ensure oil storage facility from the private sector over the past four months, the BPC could not ensure a single facility to date, he also said.

To cope with lower storage facility, the entity is importing only four oil cargoes this month instead of the 12 scheduled ones, he added.

Officials said four private companies - United Group, Super Petrochemical, SA Corporation and TK Group - showed interest to store the BPC's petroleum products in their storage facilities on a rental basis.

But the state-run corporation could not use their tanks, as those were not ready for storage as per international standards. Besides, the rates they offered were exorbitant.

United Group offered to store oil at Tk 250 per tonne per month, Super Petrochemical at Tk 400, and SA Corporation at Tk 550.

For its lowest offer, the BPC was interested in using United's storage, and subsequently got approval from the Energy and Mineral Resources Division.

But despite several reminders, the company could not prepare its storage facility until now, it is alleged.

Due to storage bottlenecks, the state oil corporation deferred a total of 17 oil cargoes since April. Each cargo has the capacity to carry an estimated 30,000 tonnes of oil products.

Currently, the BPC has total storage capacity of 1.32 million tonnes of oil products, which include diesel, furnace oil, petrol, octane, kerosene, bitumen, condensate and crude oil.

But due to lower petroleum consumption during the general shutdown from March 26 to May 30 along with subsequent limited-scale office and commercial operations, the BPC's oil tanks were almost full.

The corporation had to shut operations of the country's lone crude oil refinery for around a week in June due to oil storage shortage. Its storage capacity was saturated due to low domestic demand.

As a consequence, the BPC had to cancel one 100,000-tonne Murban crude oil term cargo from Abu Dhabi National Oil Company (ADNOC) in June.

The corporation is the sole importer of petroleum products in the country, except high sulfur fuel oil, and usually imports around 6.0 million tonnes annually, including 1.4 million tonnes of crude oil.

Despite a fall in consumption of oil products, the BPC is counting profit, riding on the slump in global oil prices due to spread of the COVID-19 pandemic across the world.

If the viral infection continues to spread further and the oil prices in international market continue to fall, the BPC's profit will make a quantum leap.

The price of Brent crude, the benchmark in international oil price, now hovers around US$42 per barrel as of July 22. It was above $70 per barrel on January 07.

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