Industrial Capability of Bangladesh: Petroleum Refining

In general Trade means the exchange of goods and services between two or more parties in consideration of money or money’s worth, however Commerce means exchange of goods and services between the parties along with the activities such as insurance, transportation, warehousing, advertising etc that completes that exchange. Bangladesh produced small amounts of industrial minerals and processed products, which included cement, clay, limestone, nitrogen fertilizer, and salt.

The Eastern Refinery Ltd. (ERL), which was a subsidiary of Bangladesh Petroleum Corp. (BPC), was Bangladesh’s sole petroleum refining company. The refinery, which was located in Chittagong, produced petroleum products from imported crude oil. Output from the refinery met about 40% of the country’s demand for petroleum products.

In june 2010 The Government also proposed to support imports of of renewable energy, and the mining of coal using open pit mining methods, and to increase exploration for oil onshore and offshore to ease the demand for raw materials to produce energy. The Government of Bangladesh planned to implement a coal power project to meet the country’s demand for electricity as gas reserves are drawn down. According to the Government’s Power System Master Plan, which outlines the coal power project, the Government was expected to have eight coal power plants with an estimated capacity of 4,000 MW (combined) in place by 2015.

According to the plan, 30 coal power plants with a combined capacity of up to 20,000 MW would be in place by 2025 (EnergyBangla.com, 2010b). By the last quarter of 2010, the Government announced that it had finalized the draft of the National Coal Policy, which would provide guidance for the development of the coal industry and seek to establish coal as a primary fuel for power generation to ensure a reliable source of energy for the country. In addition to exploring for, producing, and distributing oil and gas, Petrobangla also explored for and produced coal and granite through its subsidiaries Barapukuria Coal Mining Company Ltd., and Maddhapara Granite Mining Company Ltd., respectively. Management Resources (GCM) through its subsidiary Asia Energy was still awaiting approval from the Government to develop the Phulbari coal project, which is located in the northwestern region of Phulbari.

In February, Asia Energy offered the Government a 10% stake in the Phulbari coal project. GCM had held a 30-year term mining lease and exploration license in the Phulbari area since 2004. In October 2005, GCM submitted a feasibility study and a development scheme to the Government for evaluation and approval. Since then, political instability in Bangladesh and an ongoing Government review of the country’s coal policy had delayed the evaluation process. If the project is approved, a mine would be developed using an open cut mining method to extract the coal, and production could start within 3 years.

In 2010, Bangladesh had approximately 34 operational cement companies in commercial production that had a combined annual production capacity of about 18.5 million metric tons (Mt) of cement. In 2009 (the most recent year for which data were available), cement consumption in Bangladesh was 13 million metric tons per year (Mt/yr), and in 2008, it was about 10 Mt/yr. Estimates for cement consumption in 2010 were about 14.5 Mt/yr. The export of cement to neighboring countries had started to boom, especially as new infrastructure projects were being developed close to Burma’s and India’s border with Bangladesh, respectively. in January that the company had started exporting cement to Burma to help meet the increased demand. Reports indicate that about one-third of the local cement manufacturing companies operating in Bangladesh exported their products to India. According to the Bangladesh Cement Manufacturers Association, in 2010, the country exported up to 14,000 metric tons per month of cement to India.

Maddhapara Granite, which was a subsidiary of Petrobangla, was responsible for the production of granite at Petrobangla’s underground mine in the District of Dinajpur. The facility had the capacity to produce about 1.65 Mt/yr of hard rock. For fiscal year 2009 (which ran from July 1, 2008, through June 30, 2009) (the most recent year for which data were available), the Maddhapara Mine produced 267,434 metric tons (t) (revised) of stone, of which the majority was sold domestically for use as construction material, such as aggregates (Bangladesh Oil, Gas and Mineral Corp., 2009, p. 29)

Petrobangla started to carry out extensive exploration and drilling activities to increase gas reserves. By June 2009 (the most recent year for which data were available), the estimated proven recoverable reserves were about 188.6 billion cubic meters (reported as 6.661 trillion cubic feet) (Bangladesh Oil, Gas and Mineral Corp., 2009, p. 8; Global Coal Management Resources, 2010). In fiscal year 2010, five companies under Petrobangla carried out gas transmission and distribution in Bangladesh. One of these companies, Titas Gas Transmission and Distribution Co. Ltd. (TGTDCL), built 541 km of new distribution pipeline, which increased the length of the country’s total pipeline network to 12,037 km. TGTDCL provided gas to 11 power stations of the Bangladesh Power Development Board, 23 private power stations, and 4 fertilizer factories (Titas Gas Transmission and Distribution Co. Ltd., 2010).

Government also requested Chevron to increase its natural gas output by 28.3 million cubic meters per day (reported as 1,000 million cubic feet per day) within the near future. The request came as a measure to help ease the country’s energy shortage. Bangladesh produced about 20,500 million cubic meters of gas per year but had a shortage of about 4,125 million cubic meters of gas per year. By 2012, Chevron expected to install a compression station at Muchai that would boost the production of gas from the company’s existing gasfields. In December, Cairn Energy plc through its wholly owned subsidiary Capricorn Energy Ltd. sold all its share capital in Bangladesh to Santos International Holdings Pty. Ltd. of Australia. Cairn had held 37.5% interest in the Sangu offshore gasfield, and 50% interest in Block 16, which was under exploration. Cairn along with its partners had invested approximately $1 billion through its 16 years of operation in Bangladesh. The country exported minerals worth USD 9.57 million (M) to Bangladesh last year, a three percent increase from the previous year.

In 2014, the country exported minerals worth USD 9.21M. Although limestone and dolomite topped the list of exports, demand for boulders and chips doubled that further enhanced the export figures. Records with Bhutan Exporters Association (BEA) show that the country exported 93,838 metric tonnes (MT) of boulders and chips worth USD 1.25M to Bangladesh last year. In 2014, about 24,378MT of boulders and chips worth USD 0.36M were exported. A total of 102,100MT limestone products in lumps and powder worth USD 5M and about 89,180MT of dolomite worth USD 2.5M were exported to Bangladesh last year. Bhutanese export consignment has been facing problems in smooth transportation of minerals through the borders, Changrabandha in India and Burimari in Bangladesh. This has led to less consignment entering Bangladesh besides a decline in the overall export consignment. BEA officials said strict examination and assessment by the new customs team in Burimari lead to huge traffic congestion, which delayed trucks entering Bangladesh. The frequency of vehicles has been limited to 150 trucks a day from the previous 400.

While no such issues were reported at the Indian border of Changrabandha, it was interferences from local exporters, association, and syndicates that affected export. BEA officials said that pressure from local truckers at Changrabandha from March 8 to 13 held up about 120 consignments from Bhutan. About 36 truckloads managed to enter Bangladesh on March 13 while the remaining were allowed to enter International Customs Point (ICP) for ready delivery. The association on March 13 arranged a meeting with both the customs counterparts of Changrabandha and Burimari to resolve the problem. BEA’s general secretary Tshering Yeshi said that the association has requested Changrabandha customs to provide Bhutanese trucks a separate route line to enter into ICP as an “interim measure.” “But this will not solve the issue permanently as the number of trucks have been increasing with Bangladesh demanding more boulders from Bhutan and India,” he said. BEA officials also expressed concerns that similar initiatives arranged in the past in collaboration with the Bhutanese Embassy in Dhaka, Bangladesh failed to materialize. BEA has already forwarded the issue to Bhutan Chamber for Commerce and Industry and had verbally indicated it to the Bangladesh Embassy officials in Thimphu. BEA records indicate a steady increase in minerals exports in the last four years. Bhutan also exported minerals worth USD 8.24M in 2013, while minerals worth USD 8.31M were exported in 2012.

The event was held in continuation with an earlier memorandum signed on March 13 in presence of prime minister Sheikh Hasina during her visit to Singapore. At Wednesday’s event, prime minister’s energy adviser Tawfiq-e-Elahi Chowdhury said that completion of the projects would help to bring almost all the households under power supply coverage by 2024. State minister for power, energy and mineral resources Nasrul Hamid said that Bangladesh needed more private investment to raise the power generation capacity to 60,000MW.