Approval for Mundra to Delhi pipeline imminent

Vol 8, PW 4 (19 May 04) Midstream & Downstream

Hindustan Petroleum will soon receive approval from the oil ministry to proceed with its petroleum products pipeline from Mundra port in Gujarat to Delhi.

We are now finalising the conditions on which HPCL will be allowed to lay the pipeline, a ministry source tells PETROWATCH. We want timely completion of the project.

They should not take the Right of User and just leave it like that. Ministry officials had little choice but to approve the HPCL proposal, finding no fault with the refiners strict compliance with government terms.

On 1st December 2003, HPCL published a notice inviting Expressions of Interest in 25% additional capacity in this 1,008-km, Rs1, 367cr ($284m) pipeline, in line with government guidelines issued in November 2002. Interested companies could either object or offer to take the excess capacity within a three-month deadline that ended on 1st March.

Reliance was the only company that expressed interest in the excess capacity. But Reliance disagreed with HPCLs condition of a 25-year take-or-pay contract for the extra 2.5m t/y capacity it wanted for transporting petrol and diesel.

More, Reliance said it wanted the additional capacity for five years only, adding that the, period could be extended after mutual discussion. HPCL found this unacceptable.

It told Reliance that additional capacity could be created only if there was a firm minimum commitment with take-or-pay for the 25-year life of the pipeline. Other irreconcilable differences included Reliances insistence on Palanpur as the product injection point.

Further, Reliance did not indicate the quantity of kerosene (or equivalent product) it wants to transport through the pipeline. A kerosene batch is essential for separating the product cycles of the interested parties, we are told.

Disagreement persisted during a 30th March meeting between Reliance and HPCL and on 2nd April, HPCL sought ministry permission to proceed alone with its original 5.8m t/y pipeline capacity.

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