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India has agreed to supply 2,200 mt/month of 0.035% sulfur gasoil from the Numaligarh refinery to Bangladesh via rail for 15 years, Bangladesh Petroleum Corporation director of operations and planning Sayed Mohammad Mozammel Haque said Wednesday.

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State-owned BPC has agreed to pay a premium of $5.50/b to Mean of Platts Arab Gulf gasoil assessments on a CFR basis for the cargoes, Haque said.

BPC had earlier imported several gasoil lots via rail from the Numaligarh refinery, owned by Indian state-run Bharat Petroleum Corporation Ltd or BPCL, at a premium of $7/b to MOPAG gasoil assessments, CFR, under a "friendship gesture," he added.

BPC and BPCL agreed to lower the premium and continue the trade at a meeting held in India last week, Haque said.



He said BPC has been importing gasoil from the international market at a premium of around $2.50/b to MOPAG gasoil assessments, CFR, and while BPCL's premium was higher, import costs via rail were lower than by sea.

BPC currently imports around 3.5 million mt/year of gasoil to meet domestic demand. PIPELINE AGREEMENT

During the meeting, BPC and BPCL also reached agreement over a contentious 130 km (81 mile) gasoil pipeline, with BPCL agreeing to bear the entire cost of construction and BPC to import gasoil via the pipeline for 15 years.

BPCL had earlier said it would fund the construction from Indian credit lines instead of from its own coffers, which was opposed by BPC, resulting in a delay in the project, Haque said.

BPCL will export around 1 million mt/year of 0.2% sulfur gasoil to Bangladesh for 15 years via the pipeline at a premium of $5.50/b to MOPAG gasoil assessments on a CFR basis, he said.

The pipeline will initially carry around 300,000 mt/year of gasoil before ramping up gradually to 1 million mt/year. Gasoil demand is around 1.1 million mt/year in 16 districts in northern Bangladesh, Haque said.

The route for the 130 km pipeline has been finalized and will go via Panchagarh, Nilphamari and Dinajpur in Bangladesh to storage tanks at Parbatipur. Only 5 km of the pipeline is in India.

--Mohammad Azizur Rahman, newsdesk@spglobal.com

--Edited by Wendy Wells, wendy.wells@spglobal.com