HPCL counters Reliance in Ahmedabad and Kolkata

Vol 12, PW 10 (02 Oct 08) Midstream & Downstream

Hindustan Petroleum is expecting a Detailed Feasibility Report (DFR) from MECON on how to improve its CNG operations in Ahmedabad and the best way of serving Kolkata, faced with unwelcome competition from Reliance.

HPCL wants to become a dominant gas player in both cities and on July 17 asked MECON for a report on Ahmedabad and on August 5 made a similar request for a study on Kolkata. “HPCL expects MECON to submit both reports in the next 10-15 days,â€‌ we hear.

By the end of this year the Petroleum and Natural Gas Regulatory Board wants to open Phase-I bids from companies applying to set up gas networks in cities without such services. HPCL already operates 13 CNG stations in Ahmedabad, selling 40,000 cm/d gas as equivalent CNG.

But HPCL does not have a piped gas network in Ahmedabad and is worried that Reliance plans to encroach on its territory. “Reliance wants to move aggressively into city gas distribution in Ahmedabad and other cities,â€‌ we hear.

To protect its turf, HPCL has laid out two possible scenarios. One, that the regulator allows Adani Energy and HPCL to continue in Ahmedabad as present; or two, that the city is opened for bidding.

HPCL’s interest in Kolkata follows the regulator receiving Expressions of Interest for the city in June this year. PETROWATCH also understands that MECON’s mandate from HPCL includes suggesting options for gas sourcing for the proposed network.

“Gas sourcing in Ahmedabad should not be a problem,â€‌ our source says. “For Kolkata HPCL could talk to ONGC or Great Eastern if they offer a good price.

â€‌ YK Modi-owned Great Eastern operates the Raniganj South CBM block in West Bengal where first gas production is being sold as CNG at one station; ONGC operates CBM block BK-CBM-2001/1 at Bokharo in Jharkhand. Great Eastern and Indian Oil signed an agreement in 2006 for a retail gas network in and around Kolkata but this has yet to be approved by the regulator.