Bangladesh's HSFO imports to fall in May on lower demand, resumption of gas output

Bangladesh is likely to reduce its HSFO imports in May by around 11.1% from April on the back of lower consumption during Eid-ul-Fitr holidays and resumption of natural gas production from the country's largest gas field Bibiyana, market sources said in the week started April 24.

Bangladesh is likely to import around 400,000 mt of high sulfur fuel oil in May to meet domestic demand for power plants, down from 450,000 mt in April, Imran Karim, the president of Bangladesh Independent Power Producers' Association, told S&P Global Commodity Insights April 28.

Most industries will be shut and HSFO-fired power plants will operate at lower capacity during the Eid holidays, likely to last for a week to 10 days at the start of May.

Moreover, rainy days are ahead as the country heads to summer months with temperatures likely to fluctuate, which in turn is likely to slightly squeeze operations of the HFSO-fired power plants, said Karim.

At the same time, resumption of six wells operation in Chevron-operated Bibiyana gas field will also help decrease the need for HSFO for power generation in May, sources added.

In April, the country had to rely on HSFO-fired power plants for electricity generation as Bibiyana's natural gas output had dropped by around one-third, or 1.275 Bcf/d, to about 800,000 Mcf/d, according to Petrobangla statistics.

The South Asian country's May imports are, however, likely to be 14.28% higher from the same period last year, when Bangladesh had imported around 350,000 mt of HSFO.

Ever increasing domestic consumption from power plants and heavy-duty industries are the main reason for the country's soaring HSFO demand, market sources said.

Among the private entities United Group is expected to import around 18%, Summit Group around 19%, Acon Group around 7%, Confidence Group around 8%, and Orion Group around 7% of the total HSFO imports, an industry source said.

The Asian 180 CST HSFO market remains bullish amid strong demand from South Asian countries like Bangladesh, Pakistan and Sri Lanka. The 180 CST HSFO cash differential to the Mean of Platts Singapore strip rose by $14.39/mt from the start of the month to $36.50/mt April 28, S&P Global data showed.

Bangladesh imported around 3.2 million mt HSFO with 3.5% sulfur in a year, of which 3 million mt is imported by the private sector and the remaining 300,000 mt by state-run Bangladesh Petroleum.

Bangladesh has about 5,700 MW of HSFO-fired power plants, of which 4,500 MW are owned by the private sector and the remaining 1,200 MW is state owned.