December commercial start for HPCL-Total LPG cavern

Vol 11, PW 13 (01 Nov 07) Midstream & Downstream

Sometime early next month (December) India’s first and biggest-ever underground LPG storage facility will begin commercial operations at the port town of Vizag in Andhra Pradesh.

Constructed by South Asia LPG, a 50:50 joint venture between Total and state-owned Hindustan Petroleum, the underground cavern will store 60,000 tonnes of LPG at full capacity. Work teams are currently commissioning the facility for commercial operations.

“Around November 20, the cavern will be â€کgassed’ with 2000 tonnes of LPG to displace the air inside,â€‌ we are told. This can be done either from a LPG tanker berthed at Vizag or by road tankers bringing in LPG from nearby onshore storage tanks.

“Unloading from a ship will take just two or three days but using road tankers could take 10 days,â€‌ adds our source. “Using road tankers is safer at this stage of commissioning.

Successful gassing of the cavern means the facility will be fully commissioned.â€‌ Following this, commercial operations will begin in the first week of December when the cavern is filled with LPG that HPCL has contracted from Saudi Aramco.

“One cargo of 40,000 tonnes (LPG) will come in every month for all of 2008,â€‌ we learn. Under HPCL’s agreement with Total, HPCL has exclusive rights to use the cavern for the first two years.

“Total can later use the cavern for its own (LPG business) hedging activities.â€‌ HPCL plans to import LPG into the cavern not only for itself, but also for Indian Oil and Bharat Petroleum, similar to a system followed by IOC at Kandla port, HPCL at Mangalore and BPCL at Kochi.

When completed, the Vizag LPG cavern will cost Rs333cr, well within the original approved cost. But significant delays overshadowed project completion, attributed to “the unique nature of the projectâ€‌ and that all the critical equipment was imported from around the world.