Eastern Refinery halts operations amid crude shortage, restart expected in early May
Fuel supply will not be affected as the country has sufficient stocks of refined fuel
Highlights:
- Eastern Refinery PLC halts operations due to crude oil shortage
- Imports stalled amid Iran-Israel-US conflict disrupting global supply routes
- Refinery used unsafe "dead stock" crude to sustain operations
- Output reduced significantly before shutdown as reserves dropped critically
- New shipment expected early May via alternate route bypassing Strait of Hormuz
- Government assures sufficient refined fuel stocks; no immediate shortage expected
Bangladesh's only state-owned oil refinery, Eastern Refinery PLC (ERL), has been forced to suspend its refining operations due to a shortage of crude oil. According to two officials, the last refining activities took place on Sunday afternoon.
The disruption comes as crude imports have remained stalled due to the conflict involving Iran, Israel and the United States. ERL authorities will now have to wait until the first week of May for the next crude shipment to arrive. However, the Energy Division has assured that the country has sufficient stocks of refined fuel and supply will not be affected.
According to ERL officials, operations had been continuing by using around 5,000 tonnes of crude trapped in the pipeline of the Single Point Mooring (SPM) at Maheshkhali, Cox's Bazar, along with "dead stock" crude from the bottom of four storage tanks. ERL typically refines around 4,500 tonnes of crude per day, but due to the shortage, output had already been reduced to about 3,500 tonnes daily since last month. As of 4 March, usable crude reserves had dropped below 2,000 tonnes.
An ERL official, speaking anonymously, said around 33,000 tonnes of crude remained as dead stock in five tanks, which – along with the 5,000 tonnes from the SPM – was used to keep operations running. "But this is unsafe. Dead stock contains impurities and waste that can clog pumps and damage equipment," he said.
Another official confirmed that operations were officially halted on Sunday afternoon as the remaining crude level fell below usable limits. Typically, about 1.5 metres of crude at the bottom of tanks is considered dead stock; by Sunday, it had dropped below 1 metre, making it unsuitable for use and potentially harmful to the plant.
Attempts to reach ERL Managing Director Md Sharif Hasnat and Bangladesh Petroleum Corporation (BPC) Chairman Md Rezanur Rahman for comments were unsuccessful.
According to BPC data, Bangladesh imports around 6.5 to 6.8 million tonnes of fuel annually, including significant volumes of diesel and crude oil. About 1.5 million tonnes of crude are imported from Middle Eastern countries and refined at ERL, which produces 16 types of petroleum products including LPG, petrol, octane, kerosene, diesel and furnace oil. In addition, the country imports around 4.5 million tonnes of refined fuel annually from India and China.
Crude shipment expected in early May
The last crude shipment arrived in Bangladesh on 18 February. Shortly after, tensions escalated in the Middle East, leading to disruptions in oil transport routes, particularly the Strait of Hormuz. As a result, a 1 lakh tonne crude shipment scheduled to depart from Saudi Arabia's Ras Tanura terminal on 3 March was cancelled. Another shipment from Abu Dhabi was also scrapped.
This has left the country without any crude imports for 54 days, triggering the current shortage at ERL.
BPC officials said they have secured a new shipment of 1 lakh tonnes of crude from Saudi Aramco. A letter of credit has already been opened, and the shipment is expected to be loaded from Fujairah port in the UAE on 21 April. It is likely to arrive in Bangladesh via the Arabian Sea – bypassing the Persian Gulf – by the first week of May.
Officials also noted that ERL is designed to process only Arabian Light crude from Saudi Arabia and Murban crude from the UAE, limiting its flexibility. However, amid the ongoing crisis, the government has approved a proposal to import 1 lakh tonnes of crude from Malaysia-based Abir Trade and Global Markets, though final decisions are still pending.
No immediate fuel crisis feared
Despite the shutdown, officials say there will be no immediate fuel shortage in the country, as the government has ensured adequate imports of refined fuel – even at higher prices – since the conflict began.
Data from Chattogram Port and BPC show that 17 fuel-laden vessels arrived in March alone. Of these, eight ships imported 2,31,229 tonnes of diesel from Malaysia and Singapore. Additional shipments included high sulphur fuel oil, base oil, condensate and other petroleum products. Besides, India supplied around 22,000 tonnes of diesel via pipeline in four consignments.
In April, additional shipments of diesel, octane and furnace oil have already arrived.
Monir Hossain Chowdhury, spokesperson of the Energy and Mineral Resources Division, said ERL had attempted to continue operations using dead stock. "Even if ERL remains shut, there will be no fuel shortage in the country. We have sufficient refined fuel stocks and are procuring based on demand. A new crude shipment is also expected by the end of this month," he added.
