State-run Bangladesh Petroleum Corporation plans to start imports of 10 ppm sulfur gas oil in July 2018, ahead of a government mandate to switch to the ultra-low sulfur diesel grade from 2019, a senior BPC official said December 6.
The country’s sole gas oil importer expects to import around 1.75 million mt of 10 ppm sulfur gas oil during July-December 2018, he added.
“We want to start importing the cleaner gas oil earlier from mid-2018 to stay in advance over the mandatory provision of shifting the gas oil specifications to lower sulfur content,” he said.
BPC is set to roll out tighter gas oil specifications in January 2019, from the current 500 ppm sulfur gas oil grade under a directive from the Ministry of Environment and Forests.
But the directive only applies to imports as Bangladesh’s sole refinery is still producing 0.25% sulfur gas oil.
In general, oil companies need a lead time — which can take up to several months — ahead of any mandatory switch to tighter specifications fuel in order to clear existing supply and flush their distribution lines and storages.
While BPC’s existing gas oil suppliers are able to start supply of 10 ppm sulfur gas oil from early 2018 as many newly built refineries are producing ultra-low sulfur diesel in larger volumes, BPC is already in the final stage of awarding its oil products tender for first-half 2018 that includes 780,000-980,000 mt of 500 ppm sulfur gas oil, the official said.
Adding to this, BPC is in final negotiations with term suppliers to import 0.05% sulfur gas oil during H1 2018, which means BPC will not be able to take in 10 ppm sulfur gas oil until its next term cycle, he added. Meanwhile, BPC may have to raise pump prices of gas oil to offset higher import costs of 10 ppm sulfur gas oil. Currently, the retail price of 500 ppm sulfur gas oil is Taka 65/liter (81 cents/liter).
BPC last lowered the sulfur content in its gas oil import specifications in January 2015 to 500 ppm, from 2,000-2,500 ppm.
Its 1.5 million mt/year (33,000 b/d) refinery at Chittagong however, is still producing 0.25% sulfur gas oil. The refinery is expected to be upgraded to produce 10 ppm sulfur gas oil after the planned 3 million mt/year refinery, that can meet ultra-low sulfur diesel specifications, to be built near the existing unit comes online by 2021.
Bangladesh has been importing around 3.5 million-3.7 million mt/year of gas oil over the past several years to meet mounting domestic demand.