Vizag LPG terminal faces limited delay in start-up date

Vol 10, PW 10 (07 Sep 06) Midstream & Downstream

Logistical difficulties in the remote port city of Vizag in Andhra Pradesh have forced South Asia LPG to put back till next year the completion date of its 60,000-tonne underground LPG storage facility.

This is the first facility of its kind being built in this far corner of the country, the company tells us. We are waiting for some important equipment.

It is available in Delhi but not in Vizag. Bringing it here is taking time.

Total and Hindustan Petroleum - joint promoters of South Asia LPG with 50% each are spending approximately Rs300cr ($68m at todays exchange rate) on construction of the 160-metre depth LPG cavern. But delays in the delivery of a diaphragm wall to stop water flooding the terminal when operational and other technical issues involving the shafts, have forced contractor Larsen & Toubro to tell promoters that the completion date will now be sometime in the second quarter of 2007, not at the end of this year as thought earlier.

Our deadline for completion is constantly being put back and put forward, we hear. We are on a learning curve.

When complete, the new warehouse facility will enable HPCL, the principle customer, to shift its LPG supply hub for southern India from Mangalore port on the west coast of India to Vizag port on the east coast, a move that could result in cheaper LPG if HPCL decides to pass on the savings to customers. HPCL today receives most of its imported LPG from the Middle East at Mangalore, which can only berth LPG carriers with a maximum 20,000-tonne capacity, and then transports it 900-km away to Hyderabad (Secunderabad) by pipeline.

Contrast that with Vizag, an Indian naval base, which can berth LPG ships double the size (40,000 tonnes) and is only 600-km from Secunderabad. HPCL will save on the freight charges and the transportation charges, we hear.