IndianOil planning new pipeline for northeast

Vol 19, PW 26 (08 Sep 16) Midstream & Downstream

Here's some breaking news, not in the public domain.

IndianOil is planning a new petroleum product pipeline in the rugged northeast - a project potentially worth up to Rs1950cr ($291m) for hungry contractors desperate for work. Still on the drawing board, Anish Aggarwal, director pipelines, tells us the 650-km pipeline from Guwahati in Assam to Imphal in Manipur will pass through Silchar in Assam.

"Our in-house team has prepared a feasibility report," confirms Aggarwal. "We've asked the oil ministry for 'viability gap' funding (to bridge the time taken for a favourable Internal Rate of Return)." He adds ministry approval has yet to come but when it does IOC will hire a consultant to prepare a DFR.

"For this project to make sense," adds Aggarwal, "we need a 12% post-tax return on investment." Another source in IOC's pipeline division says the project is at an early stage with the exact length and diameter of the pipeline yet to be finalised. Under review is a 392-km stretch from Guwahati to Silchar and a 258-km stretch from Silchar to Imphal to transport mostly petrol and diesel from IndianOil's (1m t/y) refinery at Guwahati in Assam.

What purpose will the pipeline serve? "Pipelines are safer (than transporting products by road)," we hear. "Oil products can be transported without disruption even if there is a strike or a natural calamity."