Bangladesh seeks to refine Russian crude in India to diversify energy sources
Window also being explored to refine Middle Eastern crude in UAE
Bangladesh is pursuing an agreement with India to process Russian crude oil at Indian refineries and import the refined fuel for domestic consumption, in what officials describe as an urgent strategy to diversify energy sources.
The initiative comes as global energy markets remain volatile following disruptions linked to the Iran war, which temporarily halted shipments through the Strait of Hormuz, a route that handles around 20% of global oil and LNG trade. The situation has exposed Bangladesh's heavy dependence on Middle Eastern fuel imports.
Apart from processing Russian crude in India, Bangladesh is also exploring a new window with the United Arab Emirates to refine other variants of Middle Eastern crude at its refineries and establish LPG terminals, supply of LPG and petroleum products.
Speaking to The Business Standard, officials said the dual-track approach involving India and the UAE reflects a broader policy shift aimed at reducing reliance on Middle Eastern energy sources and overcoming domestic refining constraints.
They expressed optimism that leveraging foreign refining capacity and expanding international partnerships could strengthen Bangladesh's energy security if implemented effectively.
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Plan to refine Russian crude in India
According to official documents obtained by TBS, the Energy and Mineral Resources Division sent a file to Power and Energy Minister Iqbal Hasan Mahmud on Wednesday, seeking approval to engage with the Ministry of Foreign Affairs to facilitate diplomatic engagement with India for a government-to-government (G2G) agreement in refining Russian crude.
Under the proposed arrangement, India will import Russian crude on behalf of Bangladesh, refine it at its domestic facilities, and export the finished petroleum products back to Bangladesh. Bangladesh will bear the full cost of crude imports, refining charges and transportation.
Officials said the initiative is necessary to ensure an uninterrupted fuel supply and manage price volatility in the global market. India already imports Russian crude and refines it for domestic use as well as exports, making it a viable partner for such an arrangement.
Limitation at Eastern Refinery
The move is also driven by technical limitations at Eastern Refinery Limited, the country's only state-owned refinery located in Chattogram. Established in 1968, the refinery has an annual capacity of 15 lakh tonnes and is primarily configured to process Middle Eastern crude, making it less suitable for heavier Russian crude.
As a result, Bangladesh relies heavily on importing refined petroleum products such as diesel, octane and jet fuel, increasing pressure on foreign exchange reserves. According to central bank data, the Bangladesh Petroleum Corporation spent Tk66,344 crore on fuel imports in the 2024-25 fiscal year.
Officials believe that utilising foreign refining capacity, particularly in India and the United Arab Emirates, could reduce costs and improve supply stability.
Strategic urgency
The initiative has gained urgency amid ongoing geopolitical tensions and uncertainty surrounding sanctions on Iran and Russia. A temporary waiver of United States sanctions on Russian oil exports has created a limited opportunity for Bangladesh to explore indirect imports.
Energy expert M Tamim cautioned that any arrangement should remain short-term due to the volatility of global oil markets. He noted that prices could fall sharply, making long-term commitments risky.
"The oil market is very volatile. The future is hard to predict and anything could happen, including a free fall of oil prices to below pre-Iran war levels. If we can get refined fuel from Russian crude while US sanctions are waived for now, it will help us," he said.
To advance the plan, the Energy Division has formally requested diplomatic engagement with Indian authorities to enable refined fuel imports under a G2G framework.
Risks of overdependence
However, the proposal has raised concerns about overdependence on a single supplier. Energy sector insiders warned that reliance on one country could create vulnerabilities during geopolitical conflicts or natural disruptions.
They pointed to recent instances when suppliers from China and Malaysia invoked force majeure clauses, affecting supply commitments.
M Tamim said, "Enforcing force majeure in wartime scenarios is very normal and is associated with most long-term contracts."
Diesel import cooperation with India
Bangladesh already maintains energy cooperation with India through a cross-border diesel pipeline linking Siliguri to Parbatipur in Dinajpur. The pipeline enables imports from Numaligarh Refinery Limited under a 15-year agreement signed in 2023.
For 2026, Bangladesh initially confirmed imports of 1,20,000 tonnes, falling short of the contracted 1,80,000 tonnes. Following recent disruptions, the country has requested India to supply the remaining 60,000 tonnes, though a final decision is still pending.
Move to engage UAE refinery
Sheikh Ahmed Bin Faisal Al Qassimi Group of Companies has sent a proposal that includes refining crude at UAE facilities, establishing LPG terminals in Bangladesh, and supplying LPG, gasoil, Jet A-1 and other fuels.
The proposal gained momentum after a meeting on 2 April between Sheikh Ahmed Bin Faisal Al Qassimi, chairman of the group, and Minister Iqbal Hasan Mahmud.
To assess the UAE offer, the Energy Division has formed a four-member technical committee led by Hayat Md Feroze, joint secretary of the Development Wing. The committee has been tasked with evaluating technical, financial and commercial aspects, including refinery utilisation, supply chain logistics, pricing and risk factors.
The committee will also assess the alignment of the proposal with Bangladesh's national energy policy and long-term energy security objectives.
In addition, it has been authorised to engage with relevant stakeholders and agencies to determine appropriate strategic actions.
The committee has been instructed to submit a comprehensive report, along with specific recommendations, to the Energy and Mineral Resources Division within a stipulated time frame.
