Analysis: Bangladesh’s fuel oil imports to grow 25% in 2019 on new power capacity
State-owned Bangladesh Petroleum Corporation’s high-sulfur fuel oil imports are set to increase by 25% to around 2.5 million mt in 2019, as 12 new HSFO-fired power plants are set to come online, BPC’s director for operations and planning, Sayed Mozammel Haque said.
The expansion of Bangladesh’s oil-based power generation capacity began in 2010, amid a natural gas deficit caused by depleting upstream reserves and rapid industrialization, bringing almost 40 new oil-fired power plants online by the end of 2016, and turning Bangladesh from a net fuel oil exporter into a net importer.
Bangladesh is expected to import around 2 million mt of HSFO in 2018, 1.5 million mt by the private sector and the remaining 500,000 mt by BPC, Haque said, adding that the additional 500,000 mt of HSFO in 2019 would be imported by the private sector.
The Ministry of Power, Energy and Mineral Resources awarded contracts to private entities for the construction of 12 new HSFO-fired power plants with a total generation capacity of 1,755 MW, said public relations director Saiful Islam Khan.
Bangladesh’s only operational 1.5 million mt/year refinery, BPC’s Eastern Refinery Ltd, produces around 250,000 mt/year of HSFO, which it supplies to BPC.
NATURAL GAS SHORTAGE
Since 2012, the power division under the ministry of power, energy and mineral resources has awarded contracts to build gas-fired and coal-fired plants, but these have faced delays, forcing the government to extend the contracts of the oil-fired plants.
While Bangladesh’s LNG imports are aimed at bridging the gap between falling domestic production and growing demand, its long-awaited entry into the LNG markets has not come without challenges, and future LNG imports have recently been revised down on infrastructure constraints.
Earlier this year, technical issues, rough seas and pipeline construction delays kept Bangladesh’s first ever LNG cargo stranded off the south coast of Chittagong for more than three months, highlighting the difficulties of opening new LNG demand centers in emerging Asian markets.
Infrastructure constraints and revised demand projections have forced Bangladesh to cancel three small-scale LNG import projects recently.
Earlier this month, Bangladesh terminated talks with Indian utility Reliance Power to build a new floating storage and regasification unit at Kutubdia Island near Chittagong, Platts previously reported.