HPCL's ambitious gas plans in three states

Vol 14, PW 19 (24 Mar 11) Midstream & Downstream

India’s second largest state-owned refiner Hindustan Petroleum plans to boost its gas operations by setting up new joint ventures in West Bengal, Rajasthan and Andhra Pradesh.

PETROWATCH learns HPCL is talking to all three states about setting up retail gas joint ventures in which it wants 26% stakes. By the end of this month (March), HPCL is also expected to finalise a draft shareholder agreement with GAIL and West Bengal authorities to set up a retail gas venture exclusively for Kolkata.

“West Bengal will have a 26% stake in this joint venture,” confirms a well-placed source. “HPCL and GAIL will split the balance equally.

” HPCL’s new joint venture in Kolkata will begin supplying gas in the city two to three years from now, we hear, after taking over the coal gas retail distribution business of state-owned Greater Calcutta Gas Supply Corporation. HPCL believes West Bengal, Rajasthan and Andhra Pradesh are the strongest bets for it to further expand its presence in the retail gas sector, as it could leverage its network of refineries, pipelines, petrol stations, fuel depots, LPG bottling facilities and infrastructure for petroleum products.

“It is relatively easy for HPCL to build a gas business on these strengths,” we are told. “Its biggest advantage is its network of petrol stations which it can use to sell CNG.

” Andhra Pradesh could turn out to be HPCL’s best potential retail gas market, as the company has a 65% share of the LPG business there, not to mention the 8.8m t/y Vizag refinery and other infrastructure including a 60,000 t/y underground LPG storage facility that it operates with Total. HPCL already has a stake in Andhra Pradesh-based retail gas company Bhagyanagar Gas and a stake in Madhya Pradesh-based retail gas player Aavantika Gas.