HPCL prepares $51m storage tank tender

Vol 16, PW 3 (23 Aug 12) Midstream & Downstream

EPC contractors can expect rich pickings at Hindustan Petroleum following the state-owned refiner’s decision to urgently construct four more storage tanks at its Mumbai refinery or risk huge financial losses.

Actual ‘throughput’ at HPCL’s overburdened refinery has hit 7.4m t/y against total installed capacity of 6.5m t/y. Luckily the HPCL board is expected to approve a Rs285cr ($51.2m) capacity expansion project in October after identifying available land nearby.

After board approval, HPCL will carry out an EIA with ‘rapid risk analysis’ and secure environment ministry clearance, followed by tenders to construct the additional tanks, which must be installed within 24 months. “Our current product storage capacity and handling facilities don’t make for smooth refinery operations,” explains a company source.

HPCL, he says, is forced to cut daily production by 2915 tonnes on average, leading to a loss of over Rs70cr ($12.5m) every year. Upgrades over the years have raised the refinery’s original 5.5m t/y capacity to 6.5m t/y but that’s no longer enough.

HPCL has temporarily hired two petrol and two diesel tanks from Aegis Logistics, each with a 10,000-kilolitre storage capacity, paying monthly rent of Rs180/kilolitre ($3), translating to a hefty Rs8.64cr ($1.5m) every year. Any disruption to these services can spell disaster, as HPCL will be forced to cut production further.

Consultant Mecon prepared a DFR on the proposed expansion in March. HPCL wants each new storage tank to have a 20,000-kilolitre capacity; two tanks will store Euro-III and IV petrol; the other two will store Euro-III and IV diesel.

HPCL expects the selected contractor to lay pipelines to connect storage tanks to the refinery and each other; to install ‘re-circulation pumps’; and to lay a pair of 24-inch diameter, 5-km pipelines from the refinery to the jetty.