IOC converts Kandla-Bhatinda into crude pipeline

Vol 6, PW 2 (27 Mar 02) Midstream & Downstream

RELIANCE HAS BEEN dealt another blow by Indian Oil in their ongoing battle for market access after April 1st.

On 18th March the press carried a public notice from IOC confirming it has begun converting its Kandla-Bhatinda products pipeline into a crude pipeline. The conversion is expected to be completed by July 2004.

"After conversion, the pipeline would exclusively service the crude oil requirements of the Corporation's inland refineries," concludes the notice signed by company secretary R. Narayanan.

"All those concerned with the above are advised to make alternate arrangements." On the surface IOC's Kandla-Bhatinda crude pipeline is needed to feed plans to double Panipat capacity to 12m t/y. But its difficult to escape the conclusion that the real aim is to choke off Reliance's access to the energy hungry north Indian market and prevent it from competing with IOC's products from Panipat.

Everyone knows the Kandla-Bhatinda pipeline is a lifeline for Reliance's 27m t/y Jamnagar refinery. Without it, Reliance will have to use costlier road transport to send its products north.

IOC chairman Mohammad Pathan was candid: "When Panipat is doubled it can take care of the entire north and north-west," he told reporters on 21st March in Mumbai. "There will be no need to transport products north from Kandla.

Each producer will have to have its own plan." In December IOC cancelled its post-APM take-or-pay agreement with Reliance, cutting off access to the oil PSU marketing network. More recently it beat Reliance by a very wide margin to buy IBP Petroleum.