Eastern Refinery on verge of temporary shutdown amid crude shortage

The country's only crude oil refinery, Eastern Refinery Limited, is facing the possibility of a temporary shutdown after more than a month and a half without crude oil imports.

According to sources at the Ministry of Power, Energy and Mineral Resources and Bangladesh Petroleum Corporation, Eastern Refinery can continue production only until 10 April using the existing crude, deadstock (crude accumulated at the bottom of storage tanks), and pipeline reserves.

With no crude expected to arrive before that date, a temporary halt appears almost inevitable, they said.

Officials at the Energy Division and Bangladesh Petroleum Corporation told The Business Standard that the government is making every effort to import crude quickly to prevent Eastern Refinery from shutting down.

Even if a temporary halt occurs, it is unlikely to affect the country's overall fuel supply, as Eastern Refinery accounts for only 20% of domestic fuel production, a figure that has declined further following the Middle East war.

Meanwhile, imports of refined petroleum products have increased.

Today (5 April), two ships carrying a total of 60,000 tonnes of petroleum products are scheduled to arrive at Chattogram Port, Energy Division sources said.

Another 60,000 tonnes of refined fuel is expected from Indonesia this week.

Additional supplies will come via pipeline from India, along with diesel shipments by sea. Petroleum products are also anticipated from China and Singapore during the week.

Eastern Refinery typically processes around 4,500 tonnes of crude per day, though the refinery adjusts production based on available supplies. Currently, it is refining 3,500 tonnes daily.

Yesterday, the refinery's crude stock fell below 2,000 tonnes. Deadstock stands at roughly 10,000 tonnes, with an additional 5,000 tonnes in the pipeline.

However, pipeline crude must be specially pumped into tankers, limiting Eastern Refinery's operational capacity to about five more days before a lack of raw material forces a shutdown.

BPC Chairman Md Rezanur Rahman told TBS that a notification of award was issued on 1 April to a company to import 100,000 tonnes of crude.

The company is expected to submit a performance guarantee by tomorrow. Once the guarantee is received, Bangladesh Bank approval will be required before opening the LC.

"We hope the crude cargo will arrive by 15 April, which may prevent Eastern Refinery from shutting down, as sufficient crude and necessary deadstock are available to keep operations going until then," he said.

Monir Hossain Chowdhury, joint secretary and spokesperson for the Energy Division, added that Eastern Refinery's role in domestic fuel supply is limited and has decreased further after the Middle East war.

"The government has increased refined fuel imports while also procuring crude. It is expected that 100,000 tonnes of crude will soon arrive, preventing disruption in Eastern Refinery's production," he said.

On 31 March, the Cabinet Committee on Purchase approved the procurement of 100,000 tonnes of crude. Malaysia-based Abeer Trade & Global Markets will supply the shipment, and BPC has already begun the import process.

Additionally, a ship carrying another 100,000 tonnes from Saudi Arabia is scheduled to depart for Bangladesh on 18 April.

During the 2024–25 fiscal year, BPC imported 1,509,917 tonnes of crude, although Eastern Refinery did not refine all of it.

The last crude shipment arrived on 18 February, and two shipments totalling 200,000 tonnes from Saudi Arabia and the UAE, scheduled in March, have yet to arrive.

Procurement from other sources has also been delayed.

Eastern Refinery primarily refines two grades of crude: Arabian Light Crude and Murban Crude, sourced from Saudi Aramco and Abu Dhabi National Oil Company.

The Middle East war and the closure of the Hormuz Strait had previously hindered procurement, though Iran has now allowed six Bangladeshi crude ships to pass through, raising the possibility of at least one shipment arriving.