Eastern Refinery turns to 4 countries for oil to reduce risks

Until now, Bangladesh’s only state-owned refinery, Eastern Refinery Limited, has primarily processed crude oil imported from the Middle East. However, due to the ongoing war in the region and the disruption of crude shipments, the refinery is now facing a production crisis. In this situation, Eastern Refinery has begun assessing the feasibility of refining crude oil imported from alternative sources.

It has been learned that, after initially examining the composition of crude oil from different countries, the refinery has identified oil from four countries as “refinable” in Bangladesh. These countries are Nigeria, Malaysia, Norway, and Algeria.

Tests on “Bonny Crude,” “Malaysian Blend,” “Alvheim Blend,” and “Algerian Crude” have shown that these are compatible with the existing refining process. A report on the matter has already been sent to Bangladesh Petroleum Corporation (BPC).

Following this, the process has begun to import 100,000 tonnes of crude oil from Malaysia, which is expected to arrive in the country within this month.

Currently, the refinery processes Saudi Arabia’s “Arabian Light Crude” and the “Murban Crude” from the United Arab Emirates. From these two sources, 13 types of fuel—including petrol, octane, and diesel—are produced in the country. The state-run facility has the capacity to refine 1.4 to 1.5 million tonnes of crude oil annually.

When contacted, the Managing Director of Eastern Refinery, Md. Sharif Hasnat, said the characteristics of oil from these new sources are similar to the currently used crude, making it possible to refine them using existing infrastructure. This is why the report on oil from the four countries was prepared.

Earlier, when the Russia-Ukraine War began in 2022 and global oil prices surged, countries like India and China started purchasing cheaper fuel from Russia. At that time, Russia also offered Bangladesh crude oil.

However, after testing samples, refinery authorities found the oil to be too dense to process using existing domestic infrastructure and equipment, and the plan was abandoned.

On 28 February, a joint strike by the United States and Israel on Iran triggered conflict in the Middle East. Subsequently, Iran halted shipping through the Strait of Hormuz, a key route for global oil transport. This has created uncertainty in energy imports for Bangladesh, as well as other countries.

In this context, a vessel carrying crude oil from Saudi Arabia’s Ras Tanura port has been stranded. Additionally, importing oil from the Yanbu port now incurs an extra cost of $0.25 per barrel.

Meanwhile, a shipment from the Abu Dhabi National Oil Company (ADNOC) in the UAE was also scheduled. The Bangladesh Shipping Corporation had chartered a vessel named “MT Omera Galaxy” to transport the oil from Jebel Dhanna port, but the vessel has cancelled the contract. As an alternative, the Fujairah port can be used, though officials say this would nearly double the import cost.

In this reality, a major advantage of sourcing crude oil from outside the Middle East is reduced dependence on the Strait of Hormuz.

According to BPC data, about 80 per cent of the country’s fuel consumption comes from refined oil, which is directly imported. In the 2024–25 fiscal year, around 4.7 million tonnes of refined oil worth Tk 396.92 billion were imported. During the same period, approximately 1.51 million tonnes of crude oil were imported at a cost of Tk 105.03 billion.

On the other hand, by processing condensate from local gas fields and through Eastern Refinery, about 1.496 million tonnes of fuel were produced in the last fiscal year.

However, although the refinery has a total storage capacity of around 225,000 tonnes, usable reserves dropped to just 19,000 tonnes at the beginning of April. Due to the crisis, production has had to be scaled down. Officials say current reserves can sustain operations for only another four to five days.

Nevertheless, BPC Chairman Rezanur Rahman told Prothom Alo that a shipment of 100,000 tonnes of crude oil from Malaysia is expected this month. Additionally, another vessel from Saudi Arabia is scheduled to depart toward the end of the month. Therefore, they hope that no major crisis will arise for the time being.