IOC and Petronas talk about LPG terminal at Ennore

Vol 9, PW 20 (26 Jan 06) Midstream & Downstream

Indian Oil is thinking about setting up a LPG import terminal at Ennore on the east coast of southern India near Chennai in partnership with Petronas of Malaysia.

Under consideration is a terminal that can handle LPG throughput of 600,000 tonnes a year, built either by IOC on its own or by its existing 50-50 joint venture: Indian Oil Petronas Pvt. Ltd. Talks are underway between IOC and Petronas, a source tells us.

The proposal looks viable for both sides. If IOC lets its joint venture with Petronas execute the project, the proposal will have to go to the boards of both companies for final approval.

A decision is expected shortly. IOC is basing its proposal to set up a new LPG terminal on a two-year old report prepared by state-owned consultancy Projects Development India Ltd, which chose Ennore as the best location.

Still, IOC has yet to make up its mind whether the new terminal will be at Ennore in Tamil Nadu or Kochi in Kerala on the other side of India. It could be Kochi also, adds a source.

Kochi has a lot of potential. Southern India can be fed from either location.

IOCs joint venture with Petronas imports LPG at Haldia in West Bengal. But the problem with Haldia is that the draft is not big enough for large tankers, we hear.

Haldia can take in tankers of a maximum 13,000 tonnes. The new terminal will take in takers of 20,000 tonnes capacity.

Most of IOCs LPG imports arrive in India at Mangalore port in Karnataka and are sent by road or rail to Kerala, Karnataka and Tamil Nadu. But trucking LPG to Tamil Nadu is expensive and IOC believes it can save costs by building an import terminal at Ennore.

IOC wants the terminal operational by 2008. Warns a source: It takes three years to set up a terminal of this size.

IOC should start work now if it wants the terminal by 2008.