Oil Import From Saudi Arabia
The cost of importing Tk 800 crore worth of oil is Tk 217 crore
Crude oil. Collected photo.
Since two straight routes for bringing crude fuel oil from Saudi Arabia—the Strait of Hormuz and the Bab al-Mandeb—are closed, Bangladesh has to bring oil through a new and complex route via the Suez Canal. On this route, it has to cross two continents and two oceans at once. Along this long sea route, the transport cost alone for bringing one lakh tonnes of oil to Chattogram by ship is Tk 217 crore. Meanwhile, the cost of buying the oil is estimated at about Tk 800 crore.
Because the easy and normal routes are closed, Bangladesh has fallen into trouble in importing oil from Saudi Arabia. On one hand, oil has to be bought at a higher price; on the other, transport costs have increased several times over. Bringing oil also takes more time, and risks have increased. Concern has arisen over how long Bangladesh will be able to import oil from Saudi Arabia amid so many challenges and such huge transport expenses.
For seven months, oil has not been coming through the easy route of the Strait of Hormuz. After Yemen's Houthi rebels took control in July, the Bab al-Mandeb Strait also cannot be used as an alternative. That same month, Bangladesh began bringing oil through the Suez Canal, going around Asia and Africa, as a new alternative. This alone is costing Tk 217 crore in transport expenses. This abnormal increase in transport costs compared with the cost of buying oil is putting Bangladesh Petroleum Corporation (BPC) under greater pressure. In this situation, the state-run institution is looking for new and easier alternative sources.
The country's only oil refinery, Eastern Refinery Limited, has tested the suitability of refining crude oil from four countries. The countries are Nigeria, Malaysia, Norway, and Algeria.
Eastern Refinery has tested the characteristics of Nigeria's "Bonny Crude," Malaysia's "Malaysian Blend," Norway's "Alvheim Blend," and Algeria's crude oil. BPC Chairman Dr. Md. Rafiqul Islam said discussions are underway with representatives of alternative sources on importing crude oil based on the recommendations of the refinery's report.
He said, "From March to July of this year, over five months, buying oil at a higher price and selling it at a lower price required about Tk 20,000 crore in subsidies. By next December, perhaps another Tk 11,000 crore may have to be spent in this sector. This is pressure on the government's import expenditure. Even so, the government is bearing this pressure for the people's needs."
The government imports 15 lakh tonnes of crude oil annually. This oil is refined at Eastern Refinery. Later, companies under BPC market it. Under annual G-to-G agreements, the government imports 8 lakh tonnes of crude oil from Saudi Arabia's Aramco and 7 lakh tonnes from the UAE's ADNOC. Due to the Iran-America war and attacks by Yemen's Houthi rebels, bringing oil from Saudi Arabia has become difficult. Although oil imports from ADNOC continue, transport costs have increased because of the war.
According to BPC's accounts for the 2024-25 fiscal year, the government's total expenditure on importing 15 lakh tonnes of crude oil was Tk 15,500 crore. That means the total cost of importing one lakh tonnes of oil was about Tk 700 crore.
Importing oil from Saudi Arabia to Chattogram usually takes 13 to 16 days via the Red Sea and the Bab al-Mandeb Strait directly to Chattogram port. However, due to security risks, the international route was changed this time, and the ship had to go through the Suez Canal, the Mediterranean Sea, the Strait of Gibraltar, the Atlantic Ocean, South Africa's Cape of Good Hope, the Indian Ocean, and around Sri Lanka. As a result, the ship had to cover about 13,000 nautical miles. It took a total of 50 days to reach Chattogram port.
Bringing one lakh tonnes of oil on this long route costs about Tk 1,000 crore in total. Of this, the purchase price of the oil is about Tk 800 crore, and the transport cost is Tk 217 crore. That means, compared with the previous year, the cost of importing one lakh tonnes of oil has increased by more than Tk 200 crore.
Another government institution, the Bangladesh Shipping Corporation (BSC), transports BPC's crude fuel oil. An official of the institution said, "After the Iran-America war began, bringing this oil through the Bab al-Mandeb Strait cost 10 million US dollars. This time it is costing 16 million dollars, or Tk 200 crore. Whether oil will now be brought anew on this route is a decision for BPC."
