Supply chain partly affected

The fires that recently put two Bangladesh-flagged oil tankers out of order have partially affected the petroleum products’ supply chain, potentially increasing the freight cost and exposing the already embroiled energy sector to even more uncertainties.  

The two affected oil tankers—MT Banglar Jyoti and MT Banglar Sourav—were the only lighters to carry the imported crude oils offloaded from the mother ships to the state-owned Eastern Refinery Limited, where it is refined into a number of products, the major ones of which are diesel, petrol and kerosene.

The crude oil refined at the ERL accounts for 15 per cent of the country’s total annual demand of petroleum products—over 6.4 million tonnes. The annual demand of petrol which is half a million tonne is mostly met with the ERL production. The entire annual demand of kerosene of 55,000 tonnes is also met with the ERL production.

‘We have chartered a vessel with a 25,000 tonnes capacity to make up for the absence of our own vessels,’ said Bangladesh Shipping Corporation managing director Mahmudul Malek. Malek said that the cost of hiring the vessel would be more or less the same as it was using own transport, suggesting that he neither had plan to renovate the affected lighters nor buy new ones. ‘The only downside of losing own vessels is the loss of a platform to train our own people,’ he said.

The two affected lighters had the capacity to carry 15,000 tonnes, although the capacity was never fully used. The vessels were two of the oldest among the seven vessels owned by the Bangladesh Shipping Corporation. Banglar Jyoti caught fire on September 30, while Banglar Sourav on October 5.

Energy experts, however, disagreed with the shipping corporation chief, remarking that carrying the crude in hired vessels would increase the cost. The manpower employed for the two vessels will from now on have no work with pay, the experts said, pointing out the initial burden created by the situation. The cost of ferrying a tonne of crude oil by the corporation is also likely to increase, energy experts have said, adding that its own vessels carried a tonne of crude oil for $5.50. ‘Chartered vessels will increase both technical and economic risks,’ said Mohammad Amirul Islam who teaches petroleum and mining engineering at the Military Institute of Science and Technology. 

Unless closely monitored by a third party, chartered vessels, intending to save money, become often negligent about maintaining safety standards and tend to risk supplies, he observes. The transport of crude oil in vessels over rolling waves could be dangerous if safety measures are not followed to prevent accidents such as the one originating from the oil constantly colliding with the metal inside of the oil tanker, according to Amirul Islam.

There could be leakage or various other risk factors created during the transportation of crude oil if safety standards were not properly maintained, eventually endangering the supply and environment, said Amir. Authorities are investigating the fires in the oil tankers that killed more than one people. Shipping corporation managing director Mahmudul Malek suspected sabotage immediately after Banglar Sourav had caught fire, saying that a suspicious boat had passed by the tanker before sparks were seen in four separate areas of the deck.

Corporation officials said that they had decided to stop using the oil tanker after the fire incident at Banglar Jyoti in less than a week of the first fire, which they said was due to its rundown condition. The oil-tanker in fact was on its final trip when it caught fire. The corporation is now preparing to float international tender for long-term transportation of crude oil. ‘The decision of chartering a private vessel to ferry oil when a newly-built single point mooring system remained unused for months is astonishing,’ said Hasan Mehedi, secretary general, Bangladesh Working Group on Ecology and Development.

Bangladesh had its first-ever single point mooring system built on over 90 acres of land under a government-to-government project with China at a cost of Tk 8,341 crore at Maheshkhali upazila in Cox’s Bazar. The project was completed in the second half of the last year, officials in the Eastern Refinery Limited said, adding that an accident during its initial tests delayed its official launching. The mooring was finally ready in April for use. Eastern Refinery Ltd officials said that the failure to get a deal over providing logistics support and maintenance service prevented the opening of the pipeline designed to transport oil directly from the deep sea to the refinery, ending the use of the lighter vessels for this purpose.

The offloading of fuel oil from mother vessels using the single point mooring will save at least Tk 800 crore every year. Officials have also estimated that the task that used to take 11–12 days will complete in 48 hours using the mooring system. The eastern refinery is located at Patenga where the lighters bring crude oil from the outer quay. A 15-kilometre-long pipeline has been installed to send imported petroleum products from the deep sea to directly unload at the single point mooring with a yearly capacity of unloading nine million tonnes.

A 120-kilometre pipeline has also been built to carry the crude from the single point mooring project to the Eastern Refinery Limited for treatment. The single point mooring system also has a storage capacity of 45,000 tonnes of crude oil. The mooring system also required installing of approximately 135 kilometers of offshore pipeline and 58km of onshore pipeline.

‘Not using such an infrastructure is such a huge waste,’ said Hasan Mehedi. Bangladesh is facing a severe dollar crisis for more than two years, largely due to factors related to energy, while unpaid bills mounted over the years. Bangladesh’s loan of $4.7 billion from the International Monetary Fund did not help much to end the crisis.

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