Pipeline projects scaled down at IOC

Vol 7, PW 11 (13 Aug 03) Midstream & Downstream

Bad news for contractors looking for new pipeline construction contracts from Indian Oil.

We understand Indian Oil has abandoned construction plans for 12 of 15 new petroleum product pipelines it had announced in 2000. Blame slower than expected growth in domestic consumption of petroleum products! Of the 15 pipelines planned in 2000, we are now considering only about three projects, said a company source.

Slow growth and under utilisation of pipeline capacity are reasons why these (other) pipeline projects have been dropped. Capacity utilisation of IOCs pipelines fell to 88.75% in 2002-03 over 93.4% year-on-year.

But consumption of petroleum products grew by 2% to about 103.6% in 2002-03 over the previous year. More products were moved by rail and road than by pipeline.

First on IOC's new pipelines agenda is the 680-km, Rs380cr ($79m) Chennai-Trichy-Madurai Pipeline. Originally a Petronet India pipeline, this project was scrapped when Petronet found it unviable.

But IOC disagrees and wants to lay the pipeline. A letter will soon be sent to Petronet expressing IOC's intention.

This 3.3m t/y capacity, 16-inch diameter pipeline will transport Chennai Refinery products to Trichy and Madurai.Next is the 105-km, 14-inch diameter, 3m t/y capacity, Rs90cr ($19.14m) Koyali-Dahej pipeline to transport Koyali products to Dahej, for onward movement by ship to southern coastal ports.

We are now working on this proposal and are in final talks with Gujarat Chemical Port Terminal Corporation to use the Dahej port, IOC said. Then will come the Rs1,010cr ($214.89m) Paradip-Haldia crude pipeline project to lay a 335-km, 30-inch diameter pipeline with 9m t/y capacity to supply crude to Haldia, Barauni and Bongaigaon refineries from Paradip port.

We are now surveying the right of way for this proposed pipeline. Haldia docks, which now receives crude for these refineries, is not an all-weather port and falls short of IOC's needs.

IOC owns 62% of India's crude and product pipelines: 2,177-km crude pipelines and 4,346-km product pipelines.