The Bangladesh Petroleum Corporation (BPC) and the global oil suppliers are at loggerheads over the enforcement of 'force majeure' provision for the supply and delivery of fuel during the pandemic period.
Force majeure is a common clause in contracts that essentially frees both parties from the liability or obligation when an extraordinary event happens.
The state-run corporation has attempted to execute the provision to avoid the payment of 'demurrage' caused from the overstay of oil cargoes in jetties or sea as it was reluctant to unload petroleum products due to lower demand and limited storage capacity for several months last year when coronavirus was at its height, a senior BPC official told the FE.
Some 10-12 oil cargoes had to stay beyond the permitted 120 hours and several cargoes stayed over a month as a result.
Still, the oil suppliers are not interested to execute the contractual provision as the country's sea ports were operational during the coronavirus pandemic period.
Apart from the overstay of around a dozen of cargoes, the BPC had to cancel or defer 17 oil cargoes between April and July last year due to lower oil demand and shortage of storage bottlenecks.
Each cargo has the capacity to carry an estimated 30,000 tonnes of oil products.
The corporation had to shut the operations of the country's lone crude oil refinery for around a week last June due to oil storage shortage.
In consequence, the BPC had to cancel one 100,000-tonne Murban crude oil term cargo from Abu Dhabi National Oil Company (ADNOC) in June 2020.
The corporation tried to boost its oil storage facility to avoid the demurrage payment or cancellation of oil cargoes from global suppliers.
Its attempt to arrange the private sector's storage facility on a rental basis, though, went in vain.
The BPC initiated the process to get private tankers on a rental basis for four months.
Officials said four private companies -United Group, Super Petrochemical, SA Corporation and TK Group - showed interest to store the BPC's petroleum products in their facilities, although proposals were sent to nine firms.
But the state-run corporation could not use the tanks of four firms, as those lacked international standards for storage. Besides, the rates they offered were exorbitant.
For example, United Group offered Tk 250 per tonne a month, Super Petrochemical's offer was Tk 400, and SA Corporation's Tk 550.
For its lowest offer, the BPC was interested in using United's storage, and subsequently got approval from the Energy and Mineral Resources Division.
But despite several reminders, the company could not prepare its storage facility until now, it is alleged.
The BPC has a total storage capacity of 1.32 million tonnes of oil products, which include diesel, furnace oil, petrol, octane, kerosene, bitumen, condensate and crude oil.
But the lower petroleum consumption during the general shutdowns from March 26 through May 30 left the BPC's oil tanks full.
The corporation is the sole importer of petroleum products in the country, except high sulfur fuel oil, and usually imports around 6.0 million tonnes annually, including 1.4 million tonnes of crude oil.
BPC currently imports petroleum products from around a dozen of global suppliers, including Saudi Arabian oil giant Aramco, ADNOC, PETCO Trading Labuan Company Limited (PTLCL), Emirates National Oil Company (Singapore) Pte. Ltd. (ENOC), Petrochina (Singapore) Pte. Ltd, PT. Bumi Siak Pusako (BSP), Unipec Singapore Pte Ltd. PTT International Trading Pte, ans Numaligar Refinery Limited (NRL)
Azizjst@yahoo.com