Major re-think of Chennai-Trichy-Madurai pipeline

Vol 4, PW 7 (10 May 00) Midstream & Downstream

Plans to construct a 505-km oil product pipeline from Chennai to Madurai in Tamil Nadu have been jeopardised following news of a new 6.5m tonnes a year (t/y) refinery at Cuddalore.

"We have to ask ourselves if it makes any sense to put up this pipeline in its present form," a source tells Petrowatch, "The transportation cost of bringing products from Chennai to Maduraiwill always be higher than transportation costs of products coming from Cuddalore to Madurai." In April,Indias Nagarjuna Group announced plans to commission a 6.5m t/y refinery at Cuddalore by the end of next year, possibly in alliance with Caltex of the US. If plans go to schedule, the ex-Mobil refinery imported from Germany will be in direct competition with a 6.5m t/y refinery belonging to Chennai Petroleum Corporation (formerly Madras Refineries) located at Manali, which plans to increase capacity to10m t/y.

Cuddalore's proximity to Madurai has forced Petronet-India (a holding company set up to oversee the construction of product pipelines in India) to order a major "review" of the Petronet-CTK (Chennai, Trichy, Madurai) pipeline joint venture between Indian Oil Corporation (26%), Madras Refineries (23%), Petronet-India (26%) and institutions (25%). "Logic dictates that products from Cuddalore will take precedence over products from Manali," adds a source, "That's why we are reviewing the project.

We are examining many options - including two-way pumping so that Cuddalore products can go to Manali and Manali product can come to Cuddalore."