Bangladesh’s only refinery shuts down as crude shortage bites

Bangladesh’s only state-owned oil refinery, Eastern Refinery PLC (ERL), has suspended its refining operations due to a shortage of crude oil. The last refining activities took place on April 12 afternoon, The Business Standard reports.

The disruption follows a prolonged halt in crude imports linked to the ongoing conflict involving Iran, Israel and the United States. ERL authorities now expect to wait until the first week of May for the next shipment. Despite the shutdown, the Energy Division has assured that the country holds sufficient stocks of refined fuel and that supply will remain unaffected.

According to ERL officials, the refinery had continued limited operations by utilizing approximately 5,000 tons of crude trapped in the pipeline of the Single Point Mooring (SPM) at Maheshkhali in Cox’s Bazar, along with so-called “dead stock” crude collected from the bottom of four storage tanks. While ERL typically processes around 4,500 tonnes of crude per day, output had already been reduced to about 3,500 tonnes daily since last month due to the shortage. By March 4, usable crude reserves had fallen below 2,000 tons.

An ERL official, speaking on condition of anonymity, said roughly 33,000 tonnes of crude remained as dead stock across five tanks and, together with the 5,000 tonnes from the SPM, had been used to keep the refinery running. “But this is unsafe. Dead stock contains impurities and waste that can clog pumps and damage equipment,” he said.

Another official confirmed that operations were formally halted on Sunday afternoon after crude levels dropped below usable thresholds. Typically, about 1.5 metres of crude at the bottom of storage tanks is considered dead stock. By Sunday, this level had fallen below 1 metre, rendering it unsuitable for use and potentially harmful to refinery equipment.

Attempts to reach ERL Managing Director Md Sharif Hasnat and Bangladesh Petroleum Corporation (BPC) Chairman Md Rezanur Rahman for comment were unsuccessful.

According to BPC data, Bangladesh imports between 6.5 million and 6.8 million tons of fuel annually, including substantial volumes of diesel and crude oil. Around 1.5 million tons of crude are sourced from Middle Eastern countries and refined at ERL, which produces 16 types of petroleum products, including LPG, petrol, octane, kerosene, diesel and furnace oil. In addition, the country imports approximately 4.5 million tons of refined fuel each year from India and China.

The last crude shipment arrived in Bangladesh on February 18. Soon after, escalating tensions in the Middle East disrupted oil transport routes, particularly through the Strait of Hormuz. A 100,000-tonne shipment scheduled to depart from Saudi Arabia’s Ras Tanura terminal on March 3 was cancelled, as was another shipment from Abu Dhabi.

As a result, Bangladesh has gone 54 days without crude imports, leading directly to the current shortage at ERL.

BPC officials said a new shipment of 100,000 tons of crude has been secured from Saudi Aramco. A letter of credit has already been opened, and the cargo is expected to be loaded from Fujairah port in the United Arab Emirates on 21 April. It is likely to reach Bangladesh via the Arabian Sea—bypassing the Persian Gulf—by the first week of May.

Officials noted that ERL is configured to process only Arabian Light crude from Saudi Arabia and Murban crude from the UAE, limiting operational flexibility. However, in response to the crisis, the government has approved a proposal to import 100,000 tons of crude from Malaysia-based Abir Trade and Global Markets, though a final decision is still pending.

Despite the refinery shutdown, authorities maintain that there will be no immediate fuel shortage. The government has increased imports of refined fuel—albeit at higher prices—since the conflict began.

Data from Chattogram Port and BPC indicate that 17 fuel-laden vessels arrived in March alone. Eight of these shipments carried 231,229 tons of diesel from Malaysia and Singapore. Additional imports included high sulphur fuel oil, base oil, condensate and other petroleum products. India also supplied around 22,000 tons of diesel via pipeline in four consignments.

Further shipments of diesel, octane and furnace oil have already arrived in April.

Monir Hossain Chowdhury, spokesperson for the Energy and Mineral Resources Division, said ERL had attempted to continue operations using dead stock. “Even if ERL remains shut, there will be no fuel shortage in the country. We have sufficient refined fuel stocks and are procuring based on demand. A new crude shipment is also expected by the end of this month,” he added.

By Vafa Guliyeva