The average daily jet fuel demand in Bangladesh plummeted to about 20 tonnes last week from 1,200 tonnes during normal times, according to Bangladesh Petroleum Corporation, as the coronavirus outbreak grounded aviation business.
The daily diesel demand has been halved as well and is predicted to plunge further with the country experiencing a very rapid coronavirus spread at the moment with a countrywide shutdown in place since March 26.
‘We are faced with an unprecedented situation here,’ said BPC’s senior general manager Abu Hanif.
Never once in the 28 years of his job did Hanif face a shortage of space to store petroleum for the country, always imported only enough to cover several days of demand.
But because of a sudden fall in the demand Bangladesh is overwhelmed with the lack of space for its pre-ordered supplies.
Bangladesh sees its storage capacity of 13 lakh tonnes, enough to meet the country’s demand for 39 days, to reach its limit for the first time in history.
‘We will have to defer our shipments due in May to later dates, perhaps in June,’ said Hanif.
Bangladesh’s normal daily diesel demand is 1,700 tonnes, which comprises about 60 per cent of all fuel demand.
Nearly half of the 3.30 lakh tonnes of crude oil ordered for April arrived in Bangladesh by Thursday with the on-land storage capacity filled to the brim.
The BPC owns a tanker which can accommodate another 1 lakh tonnes but beyond that point Bangladesh has no way of accommodating oil.
‘We are worried about paying a huge demurrage for failing to receive the pre-ordered oil,’ said Nasrul Hamid, state minister, power energy and mineral resources.
Although the demurrage amount might vary depending on conditions, such as the source of import, the BPC officials said that it could be around $10,000 per day.
The demurrage might sound a lot in normal times but not now, in the coronavirus emergency, when plummeting petroleum price has sent many countries in search of additional petroleum storages.
Many countries have even hired companies to find them space to store oil for the global oil market had never suffered such a sudden demand shock since the great recession.
Crude oil that sold at about $80 per barrel before the virus outbreak began in China now costs less than $30.
Further falls in the oil price are predicted with the coronavirus pandemic taking graver turns in the coming days and countries such as the USA and European nations already coming to a halt due to the lockdown.
‘The prospect of the petroleum prices remaining low for long is frustrating for the oil producers — but not for us. In fact, we can benefit from the situation,’ said energy expert Badrul Imam.
He advised that Bangladesh should immediately initiate a process to invite international companies for creating underground petroleum reservoirs which existed in many countries such as India as strategic storage.
India has already built parts of its planned 5-million-tonne strategic underground crude oil storage. The USA can store 41 days of global oil production, 4.1 billion barrels.
Bangladesh spent about Tk 30,000 crore a year for importing petroleum, which is enough to build a Padma Bridge, said Badrul.
‘The oil price will obviously rebound. It would be a good deal for Bangladesh if it can store the cheap oil as much as possible,’ Badrul further said.
London-based research body IHS Markit in March predicted that the demand for oil could fall by as much as 14 million barrels a day in the 2nd quarter.
Kpler, a UK-based data intelligence company, using satellite images calculated that about 10 per cent of the global consumption was on its way to storage at some point in March.
The New York Times reported that western Canada’s 40 million barrels of storage was three-quarters full by late March.
Rystad Energy, a Norway-based energy research firm, forecast that the global oil demand would contract by over 22 million barrels per day in April and 2.5 billion barrels over the year.
Bangladesh, however, so far has no plan for stockpiling oil.
‘It’s risky investment,’ said Nasrul.
‘We should not go for risky investment with public money,’ he added.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Country