Bangladesh has signed a framework agreement with China to arrange funds of Tk4293.12 crore to install a single-point mooring (SPM) at Sonadia island and two 220km-long pipelines to connect the SPM with Chittagong's Eastern Refinery Limited.
An SPM facilitates the transfer of crude oil from mother vessels to offshore tanks and then to onshore tanks.
Kazi Shofiqul Azam, secretary of Economic Relations Division (ERD) and Chinese Ambassador to Bangladesh Ma Mingqiang signed the agreement on behalf of their respective sides at the ERD office in Dhaka on Sunday.
ERD Deputy Secretary AKM Matiur Rahman told the Dhaka Tribune: "After the framework agreement this week, the loan agreement will be signed between ERD and Chinese Exim Bank."
On December 8, 2016, the state-owned Bangladesh Petroleum Corporation (BPC) signed a Tk5,426.26 crore deal with China’s state-owned oil pipeline contractor China Petroleum Pipeline Bureau CPPB to install an SPM.
Chinese Exim Bank will provide Tk 4293.12 crore and Bangladesh will arrange Tk1021.19 crore while the BPC will invest the remaining Tk111.95 crore.
The CPPB will set up the project as the EPC (engineering, procurement and construction) contractor.
Funding for Bangladesh's first SPM was scheduled to be arranged by June and the project was scheduled to be completed by 2020.
The project's main objective is to ensure the unloading of imported crude oil in a more efficient and time-saving manner.
BPC initiated the SPM project five years ago to handle the transfer of crude oil from Kutubdia to Patenga.
With installation of the SPM, Bangladesh Petroleum Corporation will be able to cut the oil-unloading period from 21 days to just nine, from a 20-ton lighter ship.
The CPPB will build the SPM as well as the pipelines that will connect the SPM with Chittagong's Eastern Refinery Limited.
Currently, Bangladesh Petroleum Corporation imports crude and refined petroleum from the Middle-East and other countries through Chittagong Port. Large oil tankers unload crude oil to lighter vessels, which carry it to Eastern Refinery for distillation.