IOC tries to derail HPCLآ’s Mundra to Delhi pipeline

Vol 8, PW 19 (15 Dec 04) Midstream & Downstream

Indian Oil has refused to give Hindustan Petroleum a 26% stake in its 6m t/y Panipat refinery expansion because HPCL is unwilling to shelve plans for a 1036-km product pipeline from Mundra in Gujarat to Delhi.

IOC has told us we will have to shelve the Delhi to Mundra pipeline if we want a stake in Panipat, HPCL tells this report. On 28th June, HPCL told the Bombay Stock Exchange of its MoU with IOC under which the two companies would collaborate in fields of mutual interest, including an equity partnership in the Panipat refinery, which is being expanded to 12m t/y.

Under the MoU, HPCL proposed investing Rs4500cr ($1bn) in the Panipat expansion in return for 3m t/y of petroleum products. IOC believes our Delhi to Mundra pipeline would be competition for Panipat, he said.

Shocked, HPCLs board refused to consider IOCs ultimatum and in response was duly informed by IOCs refineries division that HPCL is no longer welcome in the Panipat expansion. We are not bothered about it now and are going ahead with Delhi to Mundra pipeline, adds HPCL.

IOC cannot kill competition. Last month, HPCL found support from an unlikely quarter: oil secretary Sushil Tripathi.

Tripathi told us to keep our decision on the pipeline firm. Tripathi apparently told HPCL chairman Mahesh Lal not to buckle under IOCs pressure and to show IOC that even HPCL can make inroads in the northern region.

Estimated to cost Rs1623cr ($360m), the oil ministry has given HPCL a deadline of May 2007 for completion of the pipeline, which will originate from Mundra port in Gujarat and end at Bahadurgarh near Delhi and carry a total 5.8m t/y of petrol, diesel and kerosene.

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