Bangladesh Petroleum Corp (BPC) is set to sign a 15-year deal with Indian oil refiner Bharat Petroleum Corp Ltd (BPCL) to import gasoil to meet the countryâ€™s energy demand, two company officials with the direct knowledge of the matter said.
The sales and purchase agreement is expected to be signed on Oct. 22 during Indian Foreign Minister Sushma Swarajâ€™s visit to the capital of Dhaka, the BPC officials said. The deal will be the countryâ€™s first long-term agreement with any Indian supplier.
BPCL will supply up to 250,000 tonnes of gasoil each year from its majority owned Numaligarh refinery for the first three years of the deal to the BPCâ€™s northern fuel depot via a 131-km (79 miles) pipeline, which will be built by India, they said.
â€œThe volume will be increased in line with our demand,â€ said one of the officials, adding the deal would come into effect when the pipeline is built.
Numaligarh refinery is already supplying a small volume to the state-owned BPC for the countryâ€™s northern region.
The refinery, located in the eastern Indian state of Assam, will supply around 22,000 tonnes of gasoil with a sulphur content of 500 parts per million (ppm) between October and December by railroad, the officials said.
BPC will pay a premium of $5.50 per barrel over Middle East quotes under the 15-year deal, up from the current premiums of $2.20 a barrel for gasoil cargoes it receives by tanker through the countryâ€™s southeastern port of Chittagong, said one of the officials.
â€œThis is cost-effective because there is no additional transport cost as the supply is being unloaded in our depot in the northern part,â€ the BPC official said.
BPC received its first batch this month under the three-month agreement and its fourth since 2016 amid warming ties between the two neighbouring countries.
Bangladesh typically ships in around 3.2 million tonnes of diesel and 2.5 million tonnes of fuel oil annually.
Sellers include Kuwait Petroleum Corp, Malaysiaâ€™s Petroliam Nasional Berhad, Emirates National Oil Company, Philippines National Oil Co, Vietnamâ€™s Petrolimex, Thailandâ€™s PTT, Indonesiaâ€™s Bumi Siak Pusako and Zhenhua Oil.