Bangladesh Petroleum Corporation (BPC) has incurred a loss of approximately $1,50,000 in demurrage fees due to an ullage (storage capacity) crisis.
This setback arose when BPC was unable to unload imported petroleum products as planned, partly due to a two-day shipping strike starting on December 26.
Within a week, four mother vessels carrying refined fuel arrived at Chittagong Port, overwhelming the storage capacity at depots. This led to delays in unloading, with demurrage costs ranging from $10,000 to $20,000 per day per ship, depending on contractual terms.
According to BPC sources, Meghna Petroleum and Padma Oil Company are responsible for handling the ships. In January, Padma Oil Company took charge. The rules stipulate that once a mother vessel arrives at port, unloading must be completed within five days of the survey. Failure to do so results in demurrage charges.
On January 7, Mostaq Ahmed Chowdhury, Manager of Padma Oil Company's Patenga Main Depot, sent a letter to BPC’s General Manager (Commercial and Operations), detailing the situation.
The letter noted the following ship arrivals:
MT Sewage Scopples (arrived December 31) with 32,998 metric tonnes of diesel, supplied by PT Bumi Siak Pusako (BSP) of Indonesia.
MT Ocean Sunrise (arrived January 4) with 33,000 tonnes of diesel, supplied by Singapore-based Vittal Asia Private Limited.
MT Chang Hang Jian Fang (arrived January 5) with 32,998 tonnes of diesel, supplied by Unipac Singapore Pte Limited.
MT Angel Star (arrived January 7) with 11,000 tonnes of diesel and 22,000 tonnes of Jet A-1, supplied by Vittal Asia Private Limited.
As of January 7, the total diesel storage capacity at the main depots of Padma Oil, Meghna Petroleum, and Jamuna Oil was only 7,500 tonnes, compared to the 109,996 tonnes of diesel awaiting unloading. Similarly, Padma Oil was responsible for receiving 21,000 tonnes of Jet A-1 fuel, but the company lacked sufficient storage capacity.
Padma Oil supplies Jet A-1 fuel across the country, and unloading the imported Jet A-1 was contingent on distributing the existing stock to aviation depots.
BPC General Manager (Commercial and Operations) Mani Lal Das admitted that the two-day strike disrupted lightering operations and delayed unloading. "There is no arrangement to unload all the ships' oil simultaneously at the main depot, which disrupted the planned handling of the ships," he explained.
Das estimated that the four ships incurred a combined demurrage cost of $70,000.
An official, speaking on condition of anonymity, said the situation could have been mitigated. “The strike ended on December 28, but the ships arrived between December 31 and January 7. One shipment could have been deferred by coordinating with the suppliers. This would have reduced the demurrage by over $20,000,” the official stated.
The ullage crisis underscores the need for better coordination and storage management to avoid financial losses. Experts recommend that BPC improve its handling schedule and consider deferring shipments during periods of disruption to minimize demurrage costs.
Enhanced planning and infrastructure development are essential to ensure efficient fuel management and prevent similar crises in the future.