Rising demand for petrol and diesel in central India

Vol 4, PW 6 (26 Apr 00) Midstream & Downstream

It should come as little surprise that IOC and Reliance are in deadlock over how to implement the Central India Pipeline.

For both companies, the stakes are high. Reliance, with its 27m tonnes a year (t/y) refinery at Jamnagar, is keen to find a market for its products in the Indian interior.

So too is IOC, from its 12m t/y refinery at Koyali. Quite naturally, each company will try to ensure the pipeline reaches its customers first.

Hence, an entirely predictable argument about the modalities surrounding "project implementation." It is planned that the pipeline will originate at the site of Reliance's refinery in Jamnagar, then move to IOC's site at Koyali, before winding its way through eastern Gujarat, Rajasthan, Madhya Pradesh and northern Andhra Pradesh. In these areas, demand for oil products is rising fast.

Figures compiled by Petronet-India (see below) reveal that by 2006, central India will have a deficit of 1.57m tonnes of petrol and 14.3m tonnes of diesel, kerosene and aviation turbine fuel (ATF). By contrast, Gujarat will have a surplus of 3.1m tonnes of petrol and 17.53m tonnes of diesel, kerosene and ATF - more than enough to fill the gap.

"There is considerable deficit in the market on the route of the Central India Pipeline," reads a discussion paper prepared by Petronet-India, "There will be enough availability in Gujarat to meet this deficit." (The following table illustrates the projected availability of petrol, diesel, kerosene and aviation turbine fuel (ATF) in Gujarat relative to areas adjacent to the Central India Pipeline) Product Market 2001-2002 2006-2007 2011-2012 Motor Spirit (Petrol) All India 3.5m tonnes surplus 800,000 tonnes surplus (1.8m tonnes) surplus Areas adjacent to Central India Pipeline (0.56m tonnes deficit) (1.57m tonnes deficit) (2.34m tonnes deficit) Gujarat 3.38m tonnes surplus 3.1m tonnes surplus 2.85m tonnes surplus Kerosene, Diesel, Aviation Turbine Fuel All India 1.96m tonnes surplus (14.3m tonnes deficit) (36.4m tonnes deficit) Areas adjacent to Central India Pipeline (9.67m tonnes deficit) (17.6m tonnes deficit) (26.2m tonnes deficit) Gujarat 19.57m tonnes surplus 17.53m tonnes surplus 18.39m tonnes surplus (Source: Petronet-India)