Bangladesh Petroleum Corp (BPC) plans to import 20 percent more fuel oil in the second half of this year from the first to feed demand for power generation, a senior official from the company said on Tuesday.
State-owned BPC will import about 420,000 tonnes of 180-cst high sulphur fuel oil (HSFO) in the second half, compared with 350,000 tonnes in the first half, he said.
Total fuel oil imports, however, will be higher as the government allowed power plants to import a portion of fuel oil directly.
BPC’s 33,000-barrels-per-day refinery in Chittagong meets about 30 percent of the country’s fuel oil needs that stem from its oil-fired power plants.
BPC’s import is covered by term contract as it does not enter the spot market. The premium for fuel oil for the second half of 2014 will be $34 a tonne to Singapore spot quotes, down from $35 a tonne for first-half term cargoes and from $39.50 a tonne a year earlier.
The lower premiums are in line with a weaker 180-cst market in Asia. Benchmark 180-cst spot cash differentials averaged minus 4 cents a tonne to Singapore spot quotes over in December last year, when the January-June contract was signed.
Discounts have since deepened to $1.66 a tonne to Singapore spot quotes over July 1-21, Reuters data showed. FO180-SIN-DIF
Bangladesh buys fuel oil from a number of national oil companies, including Malaysia’s Petronas, Philippines National Oil Co (PNOC), Emirates National Oil Co (ENOC), Vietnam’s Petrolimex, and also from Unipec.
Until early 2010, Bangladesh was an occasional seller in the Asian fuel oil market, offering small volumes of about 30,000 tonnes irregularly.
The 180-cst is mainly used to generate power in Asia and to a marginal extent, for fuelling ships. Besides Bangladesh, Pakistan and Sri Lanka are other key importers of 180-cst HSFO for power generation.