Bangladesh Looks Towards Russia for Cheap Oil to Fight Ongoing Economic Crisis
Bangladesh could buy cheap Russian fuel oil from Moscow as Dhaka stares at dwindling foreign currency reserves indicating an ongoing economic crisis, news agency Nikkei Asia reported.
Bangladesh recently announced its largest-ever hike in oil prices which has impacted the middle and lower income groups in the country.
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Dhaka has long-term deals with countries from West Asia when it comes to oil procurement but as oil trades at around $100 a barrel and discontent among the Bangladeshi citizens soar, Bangladesh is eyeing offers from Russia.
The Bangladesh government is hearing offers from a Russian oil company Russneft who is ready to sell refined fuel oil for $59 per barrel, including shipment costs, to Dhaka. It also offered crude oil but Bangladesh does not have the capacity to refine the crude.
Earlier this week, Russneft also sent a sample of Russian fuel oil to the Chittagong port. The Bangladesh Petroleum Corporation will perform a quality check on the fuel it has received and present a report to the government.
However, the Bangladesh government is also wary of how the West may perceive any possible arrangement. Bangladesh is eyeing a bailout from the International Monetary Fund (IMF). The UN organisation is tightly controlled by the US and its allies who have announced strict sanctions on Russia.
Bangladesh is concerned that its western allies may not be happy with any possible arrangement between Dhaka and Moscow. This could also impact the bailout plea it has made to the IMF.
There are several hurdles to cross for the Bangladesh government even if Moscow and Dhaka agree on a deal. Payment would be an issue since Russia is barred from the SWIFT banking system.
The report by Nikkei Asia also revealed that Bangladesh has scarce deposits of the Russian ruble and the American dollar which could impact buying of essential commodities, which shall also include the Russian oil imports if a deal is finalized.
Shipping of the oil is also problematic as major shipping companies have stopped catering to Russian ports.
Several Asian countries have bought Russian oil, including its neighbour Myanmar. It is likely that Bangladesh may reach out to Myanmar to resolve issues related to shipping. It also could consult India since Delhi and Moscow share a strong relationship.
The Russian ambassador in Bangladesh told local media that Bangladesh and Russia are in discussions regarding Russian wheat and fertilizer. The ambassador said talks were at an advanced stage regarding procurement of 300,000 tons of wheat and 100,000 tons of fertilizer.
