Petronas and IOC to float Ennore LPG terminal tender

Vol 11, PW 16 (13 Dec 07) Midstream & Downstream

Later this month (December) Indian Oil and its joint venture partner Petronas of Malaysia will issue a tender to select a contractor to set up a LPG import terminal at Ennore port on India’s eastern seaboard.

PETROWATCH learns the JV board formally approved the project last month after parent companies Petronas and IOC gave the go-ahead in September and October to this long-pending facility that will be constructed on a 110-acre plot owned by IOC at Ennore. A JV source tells us it plans to receive bids by January, finalise the tender by February and start work by March 2008.

If all goes to plan, the Ennore LPG terminal will be operational from December 2009. Among the critical components planned for the facility is a jetty to receive LPG tankers, two cryogenic onshore tanks, each of 15,000 tonnes capacity, compressors, two loading bays for LPG road tankers and one gantry for loading railway LPG tanks to handle 600,000 t/y LPG.

All of this is expected to cost around Rs326cr ($81.5m). Financing will come through a 1:1 debt equity ratio model, with IOC and Petronas contributing 50% each of the equity.

IOC-Petronas is excited about this project because, “it will be the first LPG import facility on India’s south eastern coast.â€‌ Most of the LPG from the plant is likely to find its way to demand centres in Tamil Nadu, which is industrialising and urbanising at a furious pace.

Annual demand for LPG in Tamil Nadu is conservatively measured at 930,000 tonnes of which IOC’s Chennai refinery supplies 360,000 tonnes. The rest is transported by road tanker from Mangalore on the other side of India – a distance of about 800-km.

“Transport by road over this distance is very expensive,â€‌ reports a source. “IOC-Petronas feels importing LPG into Ennore can be a cheaper solution.

â€‌ Once the Ennore LPG import terminal is operational, some of the LPG imported into Mangalore for the Tamil Nadu market will be diverted to Ennore. “Mangalore is already overstretched,â€‌ we hear.

“It handles 1m t/y LPG imports when its capacity is only 600,000 t/y.â€‌