Bangladesh has approved to go ahead with a $3 billion investment by Saudi Arabia to set up an oil refinery with a capacity to produce 300,000 barrels of oil products a day, a senior official said on Saturday. Hi-Tech International Group of Saudi Arabia and Cosmopolitan Oil Refinery Management Limited of Bangladesh last February signed a deal to implement the project within the next 40 months, officials said. Mohammad Mohsin, secretary of government's energy and mineral resources division, told Reuters that the Saudi firm would produce for the domestic market but may also make products for export. The plant will be set up with foreign investment and will import more than 5 million tons of crude oil from Saudi Arabia. The refinery's production capacity will be more than three times that of the state-run Bangladesh Eastern Refinery Limited (BERL), the only refinery in the country, Cosmopolitan Oil Refinery Management Chairman Dewan Sultan Ahmed told Reuters. BERL, at the port city of Chittagong with 1.5 million tons capacity, supplies refined oil to three state-owned oil firms for distribution across the country. Bangladesh imports 3.8 million tons of fuel a year, including about 1.5 million tons of crude oil, officials said. A senior government official said last month that Bangladesh would require about $8 billion in investment in the energy sector to meet growing demand up to the year 2025,. “Bangladesh will need about 24 trillion cubic feet (tcf) of additional gas to attain and maintain a 7 percent economic growth, and nearly $8 billion in investment to find and develop the required reserves,” said M. Tamim, a special aide to the head of the interim government responsible for the ministry of power, energy and mineral resources. Bangladesh, with 13.54 tcf of proven and recoverable gas reserves, is facing at least 100 million cubic feet of gas (mmcf) shortages a day, as the country can supply up to 1,738 mmcf of gas against daily demand of 1,833 mmcf, officials said. “The gap between demand and supply will further widen after five years if we do not find and develop new gas fields,” Tamim said in a presentation at an energy sector meeting, attended by 130 representatives of international energy firms. Bangladesh issued international tenders for offshore bidding last month and so far 26 firms have bought tender documents, said Muhammad Muqtadir Ali, a director of the state-run Bangladesh Oil, Gas and Mineral Corporation, or Petrobangla. “We expect more participation of the international oil companies (IOCs) as the tender document submission period will continue till the first week of May,” Muqtadir said. Over the last decade, gas consumption has been rising at an average rate of 8 percent per year and major consumers of gas are power plants and fertilizer factories, Tamim said. Bangladesh divided its offshore gas field into 28 blocks including eight shallow and 20 deep sea categories, Jalal Ahmed, chairman of the Petrobangla, said. “The IOCs will be allowed nine years for exploration in deep see blocks and eight years for shallow sea blocks,” Jalal said. The price of gas from deep sea blocks will be 100 percent of the high sulphur fuel oil (HSFO) in the Singapore market and the upper ceiling of the price will be $180 per tonne, officials said. They said the highest price for gas for deep sea would be about $4.7 per 1000 cubic feet or one unit and the highest price for shallow blocks would be nearly $4.4 per unit. Currently, the highest price for onshore gas in Bangladesh, which is producing gas from a lone offshore block, is $2.9 per unit and the price for offshore gas is 25 percent higher. Muqtadir said Bangladesh wanted to begin development work in the offshore blocks by next winter. US-based Chevron, the UK-based Cairn, Irish firm, French company Total SA and Canada-based Niko are involved in Bangladesh's energy business along with a number of small foreign firms. __
