KUWAIT Petroleum Corporation (KPC) is trying to get Bangladesh to allow it to continue supplying the country with oil products using vessels more than 20 years old in exchange for lower prices, senior Bangladesh Petroleum Corporation officials say.
KPC officials met the director general of Shipping in Bangladesh and government officials to lobby for BPC to continue taking oil products from vessels up to 25 years old. Bangladesh’s Department of Shipping recently asked state-owned BPC to stop importing petroleum products using old vessels starting in 2011 on environmental grounds. The request prompted KPC officials to visit Bangladesh prior to next month’s official negotiations with BPC over 2011 fuel imports.
“Some KPC officials came to my office last week and said their old vessels are not environmentally hazardous,” director general of Shipping Bazlur Rahman says.
He says the KPC officials said all their older vessels had double hulls, which prevented leaks even if the external hull was holed. “KPC has submitted some documents to support their claims,” Rahman says. He adds that physical surveys of KPC’s old vessels were required before they would be allowed to continue bringing oil products into Bangladesh.
BPC will take a decision on the issue in line with the Shipping Department’s recommendations and the government’s directions soon, a senior BPC official says, requesting anonymity.
Bangladesh was forced by Kuwait to relax its regulations on allowing the use of vessels more than 20 years old to supply oil products in 2009. BPC has since been accepting products supplied on vessels up to 25 years old as KPC had told the company it would charge higher prices and reject letters of credit from Bangladesh’s state-owned commercial banks if it did not accept the condition.
BPC currently has a deal under which KPC will provide 520,000 tonnes (3.8 million barrels) of gasoil at a premium of $3.40 per barrel to the Mean of Platts Arab Gulf assessment and 140,000 tonnes of jet fuel at a premium of $4.40 per barrel to MOPAG over July-December 2010.
Kuwait has been supplying gasoil and jet fuel to Bangladesh under term contracts since 2003, meeting virtually all the country’s annual demand. But the arrangement foundered in 2008 when Kuwait imposed additional conditions on letters of credit and suspended the shipment of eight cargoes, prompting BPC to look for new sources.
BPC now imports petroleum from KPC, Malaysia’s Petco, the Philippines’ PNOC, the Maldives’ MNOC and Egypt’s Midor.
BPC is expected to raise its annual oil imports by more than 33 per cent to 4.85 million tonnes per year (mtpy) next year, from 3.7 mtpy currently, as the country moves to tackle a power crisis by building dozens of new gasoil- and fuel oil-fired power plants.
