Dhaka agrees to fuel deals at higher costs

Bangladesh Petroleum Corporation (BPC) has concluded 2012 term negotiations with six suppliers for diesel and jet fuel at stronger premiums than its current contracts, a senior BPC official said yesterday. The BPC finalised its diesel term contract for the first half of 2012 at a premium of $3.50 a barrel to Middle East quotes, up from the $3.30 a barrel premium for its July to December term cargoes this year. The term contract for jet fuel has been fixed at a premium of $4.50 a barrel, up from $4.30 a barrel. Kuwait Petroleum Corporation (KPC) will supply around 1.02 million tonnes of diesel in 2012 and 210,000 tonnes of jet fuel. Malaysia's Petronas will supply 650,000 tonnes of diesel and 180,000 tonnes of jet fuel. Another 700,000 tonnes of diesel will be sourced from Egypt's Middle East Oil Refinery and 300,000 tonnes of diesel from Emirates National Oil Company (Enoc). Philippines National Oil Company (Pnoc) will supply 400,000 tonnes of diesel and 64,000 tonnes of 95-octane gasoline and PetroChina will supply 200,000 tonnes of diesel and 32,000 tonnes of 95-octane gasoline in the next year. For 95-octane gasoline the BPC will pay a premium of $7.20 a barrel, up from $7.05 per cent now. Imports to double 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 Reuters last month. 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. Pnoc will also supply around 40,000 tonnes of jet fuel and 30,000 tonnes kerosene while Petronas 60,000 tonnes of kerosene to Bangladesh. The BPC failed to reach agreement on fuel oil, however, as suppliers were asking much higher premiums, the official said. "We are getting offers ranging from $42.00 to $51.00 for fuel oil," he said. BPC paid a premium of $32 a tonne to Singapore spot quotes for 180-centistoke (cst) fuel oil in July-December. 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. BPC will buy 700,000 tonnes of Murban crude from Abu Dhabi National oil Co and another 700,000 tonnes of Arab Light crude from Saudi Aramco in the next year for its lone refinery.