CVO Petro to buy oil tanker to carry naphtha

CVO Petrochemical Refinery Ltd has signed an agreement to buy an oil tanker to carry naphtha from Eastern Refinery's jetty to its rented jetty in Chattogram.

A Japanese oil tanker having a capacity of 2,073 tonnes will be bought from its current owner "M/S MA Bashar and Brothers". 

"We have decided to buy the Japanese oil tanker mainly to ensure the quality, quantity and safety of the naphtha we will collect from the Eastern Refinery Limited for our planned solvent production," said Khwaza Mowin Uddin Hossain, company secretary of CVO Petrochemical.

His company, as the first one in the country, entered into a contract with the Bangladesh Petroleum Corporation (BPC) in September last year to collect naphtha from the BPC-owned Eastern Refinery, produce solvent out of those at its plant, and sell back the chemical product to the BPC for a margin.

"It is almost mandatory that we carry the naphtha by waterways," Khwaza said.

Naphtha is very flammable, and not many vessels are available to carry it at all times. Moreover, rented tankers used to carry diversified petrochemical goods often cause contamination, mainly due to a lack of seriousness in maintenance, he added.

The oil tanker built in the mid-1990s would cost the company Tk12 crore and the company would finance the purchase out of its fund and directors' loan, according to CVO's regulatory filings.

If the solvent production business runs as per the planned scale, one to two years of operations would be enough to save total freight expenses equal to the oil tanker price, according to the company secretary.

Also, the company can use the oil tanker for carrying condensate from mother vessels to its storage tank and it will also save some carrying cost of condensate the BPC is going to provide for fractionation.

Moreover, CVO will have the opportunity to generate extra income by carrying other company's products by the coastal and inland waterways.

CVO, once a vegetable oil refiner going broke amid uneven competition with imports and later coming back as a petrochemical refinery, suffered production hiccups several times in the past few years, mostly due to the product standard, for which the company had been blaming improper local raw materials.

However, the government, intending to increase local petroleum refining, has decided to provide local refineries with imported condensate and CVO is gearing up to be back in the business of diesel and petrol production.

CVO Petrochemical shares closed 4.7% higher at Tk236.2 on Sunday at the Dhaka Stock Exchange.