Vol 3, PW 4 (17 Mar 99) Midstream & Downstream

Hindustan Petroleum (HPCL), Indias second largest refiner, is expected to consolidate its dominance over a large section of the southern Indian market with news that it is to partner Gas Authority of India (GAIL) in the construction of an LPG pipeline.

This month the two companies signed an MOU to construct a 580-km LPG pipeline, stretching from the port of Vizag to Secunderabad via Rajahmundry and Vijayawada. The pipeline - to be developed by GAIL - will have a total capacity of 1m tonnes per annum (t/y) and a diameter of between eight to ten inches (20-23cm).

Pumping stations will be set up at Vizag, Rajahmundry, Vijayawada and Suryapet for delivery of LPG to Vijayawada and Secunderabad. Much of the LPG will be sourced from HPCLs 4.5m t/y refinery at Vizag but also from imports stored in an underground cavern facility which HPCL is constructing in an alliance with Total of France.

The new project adds to a growing list of proposed HPCL pipelines in the south. The Mumbai-based PSU already has a a pipeline running up to Vijaywada for petroleum products other than LPG and is also planning a product pipeline from the Mangalore refinery in Karnataka to Bangalore.

"The new pipeline will put HPCL in a strong position in the southern region", one analyst tell this report, "It will gain complete cost dominance over two out of three of the largest markets in the southern region: the Vishakhapatnam-Hyderabdad corridor and the Mangalore-Bangalore corridor". The third region, Madras, remains dominated by IOC.