China Eximbank provides $467.8 million preferential buyer's credit for Installation of Single Point Mooring (SPM) with Double Pipeline Project (Linked to Record ID#38349)

China Eximbank provides $467.8 million preferential buyer's credit for Installation of Single Point Mooring (SPM) with Double Pipeline Project On October 29, 2017, China Eximbank and the Government of Bangladesh signed a preferential loan framework agreement for the Installation of Single Point Mooring (SPM) with Double Pipeline Project.

Under the terms of this framework agreement, China Eximbank pledged to provide a preferential buyer’s credit (PBC) worth $467,840,000 and a government concessional loan (GCL) worth RMB 569,664,000 for the project.

China Eximbank and the Government of Bangladesh finalized the PBC and GCL agreements on November 3, 2017; however, the loans did not become ‘effective’ until April 2018.

The first repayment date for the GCL and the PBC was scheduled for April 2023.

The GCL and PBC proceeds were to be used by the borrower to finance a $550.4 million commercial (EPC) contract between Bangladesh Petroleum Corporation (BPC) and China Petroleum Pipeline Bureau (CPPB), which was signed on December 7, 2016.

According to the Government of Bangladesh’s Economic Relations Division (ERD), the GCL had achieved a disbursement rate of 100% (RMB 569,664,000 out of RMB 569,664,000) as of June 30, 2020 while the PBC had achieved a 0% disbursement rate ($0 out of $467,840,000) as of June 30, 2020, a 46.7% disbursement rate ($218,773,000 out of $467,840,000) as of June 30, 2021, a 57.1% disbursement rate ($267,496,000 out of $467,840,000) as of June 30, 2022, and a 75.6% disbursement rate ($354,031,000 out of $467,840,000) as of June 30, 2023.

According to the Government of Bangladesh’s ERD, the borrower had not made any repayments under the GCL or the PBC as of June 30, 2023.

The purpose of the project was to construct an oil tanker mooring platform and a 200 km underwater and onshore pipeline in Chittagong, Bangladesh.

The project was launched because Bangladesh is not capable of handling large vessels carrying imported crude and finished oil, due to the low navigability of a key river channel and constrained facilities at the main seaport in Chittagong.

The single point mooring system, once constructed, was expected help to offload 1.2 lakh tons of crude oil within only 48 hours and 70,000 tons of diesel in 28 hours. Its annual capacity to offload oil was expected to be nine million tons and save Tk800 crore per year.

Upon completion of the project, liquid fuel oil was expected to be carried to Moheshkhali Island, on the Bay of Bengal in Bangladeshi Cox's Bazar district, through the pipeline from large tankers anchored in the deep sea.

Later, the 110-km pipelines installed under the Bay of Bengal and in coastal areas were expected to directly carry the oil to the Eastern Refinery in Chattogram from Moheshkhali.

The project also involved the construction of a 146 km offshore pipeline and 74 km onshore pipeline to carry imported oil from the sea to a refinery in Chittagong district, some 242 km southeast of Dhaka, for processing.

CPPB, which is a subsidiary of China National Petroleum Corporation (CNPC), is the contractor responsible for constructing the oil tanker mooring platform as well as establishing the 146 km of the pipeline under the Bay of Bengal to the coast.

In January 2015, CPPB and the Energy Division under the Ministry of Power, Energy and Mineral Resources of Bangladesh signed an agreement to build a single point mooring system (SPM) in the Bay of Bengal to carry petroleum from vessels at the outer anchorage to depots onshore.

Then, in March 2015, the state-run Eastern Refinery Ltd (ERL) received a technical offer from the CPPB to build the SPM.

Before submitting the technical offer, a team from the CPPB visited the project location near Moheshkhali Island in the Bay of Bengal and found the site suitable.

The ERL, along with an international consultant, was expected to review the 'lone' technical offer before submitting its evaluation report to the Energy and Mineral Resources Division (EMRD) under Bangladesh’s Ministry of Power, Energy, and Mineral Resources (MPEMR). CPPB was then expected to submit a financial offer on completion of the review.

The project was originally expected to take 36 months to complete, but as of October 2018, CPPB had only completed initial surveying and some design work. Construction began on January 28, 2019. Drilling then began on March 15, 2019.

The project also completed channel deep post-trenching of the first offshore pipeline despite great technical difficulties.

The maximum trenching depth is 11.9 meters, setting a world record for the deepest offshore pipeline post-trenching in the industry and laying a solid foundation for the overall construction of the project. Work continued during the COVID-19 pandemic in 2020 and 2021. Strict quality control and safety risk control were reportedly put in place.

On February 2, 2021, the first 26.6 cubic meter crude oil storage tank began welding, which was the largest tank of the project. The project had achieved a 63.5% completion rate as of September 2021 and an 83% completion rate as of June 2022. Its originally scheduled completion date was December 2018.

However, it ran behind schedule and over budget. The project completion deadline was first extended to December 2019. Then, it was extended to June 2022. Then, it was extended again — to June 2023. The project was ultimately completed in November 2023.

The SPM and double pipeline began commercial operations and delivered its first batch of diesel and crude oil in March 2024 Multiple problems and obstacles were encounted during project implementation. The COVID-19 pandemic led to significant delays.

As of 2022, land owners whose plots of land were acquired for the project claimed not yet been compensated despite multiple cost overruns.

The total cost of the project also reportedly escalated by 44% and some media sources indicate that China Eximbank agreed to upsize its lending commitments for the project by 20.1% (from Tk 3,903.22 crore to Tk 4,688.26 crore).