Padma Oil signs deal with sanctioned Russian Lukoil

State-owned Padma Oil Company Limited (POCL) has signed a deal with Russian Lukoil — which is facing sanctions from the western countries — for marketing its lubricant in Bangladesh.

POCL signed the agreement on February 28 in Dubai, just four days after Russia began invading Ukraine.

After the invasion, Russia’s energy giants, such as Gazprom, its oil arm Gazpromneft and oil producers Lukoil, Rosneft and Surgutneftegaz are facing a raft of sanctions from the United States, Britain, Australia, Japan and the European Union. Over 300 western companies have also left Russia shutting their operations.

Amid this situation, Padma Oil has signed the deal, which it said as per a decision taken by its board of directors.

POCL has been marketing French company Total’s lubricants in Bangladesh exclusively for over two decades.

Chattogram-based Trade Services International which works for Total Lub Oil in Bangladesh has sent a letter to the Prime Minister’s Energy Affairs Adviser on January 12 this year requesting him not to cancel the marketing and distribution deal with Total.

“We came to know from different sources that Padma Oil is going to sign a deal with Russia’s Lukoil. It will be a violation of Padma’s deal with Total and give a wrong message to Total and foreign investors as well,” reads the letter signed by Syed Samiul Haque, director of Trade Services International, according to a report published by the Business Insider Bangladesh on February 28.

Insiders in the Bangladesh Petroleum Corporation (BPC) said that after the deal with Lukoil, POCL and other subsidiaries of BPC may fall into trouble from western nations that sanctioned Russian energy, banking companies, and oligarchs.

Though the deal with Lukoil was signed on February 28, POCL moved to set up a bonded warehouse at the company’s main installation at Guptakhal, Patenga in Chattogram in January, saying that an agreement between Lukoil and Padma Oil for distribution of lube oil will be signed soon, said a letter signed by Numan Ahmed Taffader, general manager (marketing) of POCL.

The letter was sent to the deputy general manager (operations) asking him to take all necessary measures to establish the warehouse as soon as possible so that the Lukoil-produced lubricant oil can be preserved.

POCL is one of the three subsidiaries of BPC that market petroleum products in the country. The other two subsidiaries are Meghna and Jamuna oil companies.