DHAKA, Apr 10: Bangladesh is moving to reshape its energy procurement strategy, opening parallel tracks with both India and the UAE, as Dhaka looks to shield itself from the massive shocks which rattled global markets during the recently halted Iran war.
At the centre of the plan is a government-to-government arrangement with India that would see Russian crude imported, refined, and sent back as finished fuel, with officials calling it a practical workaround for both volatile supply chains and Bangladesh’s own refining limitations, Business Standard BD reported, quoting officials.
A proposal has already been forwarded by the Energy and Mineral Resources Division to engage diplomatically with New Delhi.
Under the plan, India would handle procurement and refining, while Bangladesh would cover the full cost – crude, processing, and transport – before bringing the refined products home for domestic use.
The logic of the strategy notes that as India is already one of the largest importers of Russian crude and is also one of the few nations to possess the technology for refining and processing it at mass scale, New Delhi should thus be in charge of the technicalities, while Bangladesh would act as the buyer and cover all costs, constrained as it remains by its own limitations, and to date has only one refinery.
Built in 1968, the country’s pre-independence Eastern Refinery Limited in Chattogram is designed primarily for lighter West Asia crude and thus cannot handle heavier Russian grades efficiently.
That mismatch has forced Bangladesh to rely heavily on importing refined petroleum – diesel, octane, jet fuel – placing sustained pressure on its foreign exchange reserves.
In the 2024-25 fiscal year alone, the Bangladesh Petroleum Corporation spent over Tk66,000 crore on fuel imports.
Inside government, the tone is of cautious optimism, prioritising the security of supply at cost effective rates, while avoiding being caught off guard again by a market notorious for its unpredictability.
The urgency behind the shift has grown in recent months, as disruptions around the Strait of Hormuz exposed just how dependent the country remains on West Asian supply routes.
With roughly a fifth of global oil and LNG passing through that corridor, even temporary instability sent ripples through prices and availability, with officials now viewing diversification no longer as an option, but as a necessity.
Alongside the India track, Dhaka is also exploring a separate arrangement with the UAE. A proposal from the Sheikh Ahmed Bin Faisal Al Qassimi Group outlines a broader package, refining West Asian crude at Emirati facilities, setting up LPG terminals in Bangladesh, and supplying a range of fuels including gasoil and Jet A-1.
That proposal has moved into technical review. A four-member committee, led by joint secretary Hayat Md Feroze, has been tasked with examining feasibility – from refinery utilisation and logistics to pricing structures and long-term risks. The group is also expected to assess how closely the offer aligns with Bangladesh’s broader energy policy.
The dual-track approach reflects a deeper recalibration. Instead of relying on a single region or supply chain, Bangladesh is trying to build flexibility into its system by leveraging external refining capacity.
Energy insiders have nonetheless warned of overdependence, noting that shifting dependence from one region to another – or from one supplier to a single partner – could introduce new vulnerabilities, with past disruptions, including supply interruptions from China and Malaysia under force majeure clauses, remaining fresh in memory.
Even the India route, while promising, is not without complications. Bangladesh already imports diesel through a cross-border pipeline from Numaligarh Refinery Limited under a long-term deal.
Yet recent shortfalls – including a gap between contracted and delivered volumes – highlight the limits of relying too heavily on any single channel.
For now, the push is being framed as a short-term opportunity as well as a structural adjustment. With a temporary easing of US sanctions creating space to tap into Russian crude indirectly, officials see a narrow window to experiment with new supply models.
(UNI)
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