Single-point mooring sees cost, time overruns just before commissioning

The cost and time for the installation of the double-line single-point mooring – aimed at facilitating safer, faster and more cost-effective unloading of imported crude oil and increasing the processing capacity of Eastern Refinery Limited – are set for the fourth overrun just weeks before the commissioning.

State-owned Eastern Refinery, which is implementing the project with funding from Exim Bank of China, has requested a further extension to complete one of the country's top priority infrastructure, citing inclusion of various construction work, an increase in the foreign exchange rate, and changes in the engineering design.

The proposal suggests increasing the project cost to Tk8,222 crore, which is an increase from Tk7,125 crore in the third revision and Tk4,936 crore from the initial cost.

Infographic: TBS

At the same time, a proposal has been put forth to extend the implementation time by an additional year from the current deadline of June this year.

The fourth extension proposal has been made after the completion of 98% of the project's work, which is scheduled to be commissioned next July.

According to Project Director Md Sharif Hasnat, the revised proposal for the project, which was initiated in 2015 with an initial deadline of 2018, has already been submitted to the Planning Commission for approval.

Md Lokman, managing director of Eastern Refinery Limited, said, "Regardless of any increase in the cost or duration, the commissioning of the project is expected to take place in July. Following the inauguration, some minor work will need to be completed, which is why a one-year extension has been proposed."

He further said that the country is eagerly waiting to enter a new era in energy management through this project. The installation of a single point mooring and double pipeline in the deep sea was successfully completed last month, and the pre-commissioning phase is currently underway.

The project is set to commence its first filling of crude oil next month, with a shipment of one lakh tonnes being imported from Saudi Arabia for this purpose. If all goes according to plan, the project is expected to be inaugurated by the prime minister in July.

At present, it takes 10-11 days to release one lakh tonnes of oil from the deep sea through lighterage vessels. Once the pipelines are ready, it will take only two to three days to discharge the oil. Then there will be no need to operate lighterage vessels, which will save transportation costs.

The project is anticipated to result in savings of approximately Tk800 crore in freight costs.

The project is being implemented on a G-to-G basis between Bangladesh and the Chinese government.

According to the proposed DPP, the cost of the construction works has increased due to the inclusion of various construction works carried out by China Petroleum Pipeline Engineering Company Limited (CPPEC)-EPC, the contractor of the project. This required an additional $35 million - equivalent to Tk375.20 crore - for new construction.

ILF Consulting Engineers of Germany is working as the EPC consulting firm for the project.

In addition, the project cost is rising due to factors such as design changes, an increase in the foreign exchange rate, customs duty, value-added tax, and various fees as outlined in the revised proposal.

According to sources at Eastern Refinery, once the project is implemented, the country's crude oil refining capacity will witness a significant increase of 33%. Currently, the crude oil refining capacity stands at 1.5 million tonnes per annum (MTPA), and it is projected to increase to 4.5 MTPA.

The refinery currently meets 20% of the country's fuel demand, while the remaining 80% is met through imports.

Furthermore, the tank farm constructed at Moheshkhali has been established as a backup facility to cater to the emergency shutdown of the Eastern Refinery. Currently, the country has the capacity to store fuel oil for two months. However, upon the implementation of the project, the stockpiling capacity will increase to two and a half months of fuel oil. This will provide a greater level of preparedness and resilience in managing fuel supply during unexpected disruptions.

How oil will reach Chattogram from the deep sea

Md Lokman, managing director of Eastern Refinery, told TBS that oil tankers will dock at the single point mooring buoy located on the western side of Moheshkhali Island. The crude oil and finished products will be pumped from the vessels directly through the single point mooring buoy and stored in six storage tanks at Moheshkhali, using two separate pipelines. Subsequently, the oil will be pumped from Moheshkhali to Eastern Refinery in Chattogram for processing.

Providing an update on the project's current status, Project Director Md Sharif Hasnat said that over 200 workers, under the supervision of 70 German and Chinese engineers, are currently engaged in the final stages of the project.

"As part of the infrastructure, four generators with a capacity of 4.5 MW each have been installed in the project area. In addition, two fire service units have been set up to ensure that safety measures are in place," he added.

Furthermore, as part of the project, 18 two- and three-story buildings have been constructed for housing purposes, while 13 watch towers have been set up to enhance security measures. The construction work for a one and a half kilometre four-lane road to improve communication is currently in progress, as mentioned by the project director.