Tk 1,000cr savings likely as SPM operation begins in March

CHATTOGRAM, OCTOBER 15: The Single Point Mooring (SPM) facility at Maheshkhali in Cox’s Bazar is expected to begin full-scale operation in March next year, enabling state-run Eastern Refinery Limited (ERL) to receive crude oil faster and save an estimated Tk 1,000 crore or more in transportation and handling costs.

The country’s first integrated offshore-onshore oil storage and transportation system will allow crude oil to reach ERL through pipelines, replacing the time-consuming process of transferring oil from large tankers to smaller vessels.

The facility is moving towards operation following the government’s approval of Indonesia’s state-owned PT Pertamina Trans Kontinental as its operations and maintenance (O&M) contractor.

“I hope the operation of the system by the newly appointed operations and maintenance contractor will begin within the next four months,” Bangladesh Petroleum Corporation (BPC) Chairman Dr M Rafiqul Islam told The Daily Observer.

“We have already taken all-out preparations to begin operations through the contractor as early as possible,” he added.

The SPM system is designed to reduce the time needed to unload 100,000 tonnes of crude oil from eight to 10 days to around two days. It can also unload 60,000�"70,000 tonnes of diesel in about 28 hours.

The facility is expected to save ERL more than Tk 1,000 crore, although actual savings will depend on its operational performance and the volume of oil handled.

On September 23, the Cabinet Committee on Government Purchase (CCGP) approved a proposal to award PT Pertamina Trans Kontinental a Tk 1,946.22 crore contract to operate and maintain the facility.

The Energy and Mineral Resources Division placed the proposal before the committee, chaired by Finance Minister Amir Khosru Mahmud Chowdhury. The contract covers the SPM’s offshore and onshore facilities, marine services and associated equipment.

The appointment came more than two and a half years after construction was completed. The facility remained idle while the appointment of an operator was pending.

Meanwhile, BPC has begun repaying loans taken for the project, adding to the financial burden of the delay. The corporation has repaid Tk 3,077 crore, while another instalment of Tk 690 crore is due by December, according to information provided for this report.

The delay is estimated to have cost BPC Tk 1,000 crore to Tk 1,200 crore in foregone savings. The facility’s 18-month guarantee period for rectifying technical faults has also expired.

BPC began construction of the SPM facility in August 2018 to address the limitations of unloading petroleum products from large vessels at the outer anchorage using smaller lighterage vessels.

Large oil tankers cannot enter the Karnaphuli River because of draft restrictions. Under the conventional system, crude oil must be transferred to smaller vessels before being transported to the refinery, making the process slower and more expensive.

According to BPC documents, the project comprises a floating mooring facility, a pumping station and tank farm at Maheshkhali, and a pipeline network stretching approximately 220 kilometres. 

It also includes storage tanks for crude oil and diesel, as well as a supervisory control and data acquisition (SCADA) system.

Construction was completed in March 2024 after four deadline extensions, with the project cost rising from around Tk 5,000 crore to Tk 8,298 crore.

The prolonged delay in appointing an operator has prevented the country from realising the facility’s expected benefits despite the completion of construction and the start of loan repayments.

With the O&M contract approved, the focus is now on starting operations and delivering the anticipated savings in transportation time and costs.