IOC executing Rs 12,000-cr pipeline projects

Indian Oil Corporation (IOC), the nation’s largest fuel retailer, is busy executing a dozen-odd projects at an investment of around Rs 12,000 crore to expand its network of crude oil and products pipeline by 54 per cent to 17,000 km by 2019. This is part of a larger expansion plan involving Rs 1.75 lakh crore that is in the works.

“When commissioned, the projects would increase our transportation network from the existing 11,200 km by an additional 6,000 km by the end of FY19. The projects are primarily meant at transportation of large volumes, while the last-mile connectivity to depots would be ensured through roads,” Anish Aggarwal, director (pipelines), IOC, told Business Standard.

The 12 projects currently being commissioned would ramp up the oil marketer’s combined fuel carrying capacity by 25 million tonnes per annum (mtpa) over the five-year period, up from the current 80 mtpa. This includes the 4.5-mtpa Barauni-Hyderabad pipeline, 5-mtpa Paradip-Raichur-Ranchi pipeline and the 2-mtpa pipeline from Durgapur to Muzaffarpur via Barauni and Patna.

The three pipelines would together cover half or 3,300 km of the network length under execution. “In addition, another 8,000-km pipeline projects are in the planning stage. Plans for around Rs 3,000 crore worth of projects are likely to be approved shortly,” said Aggarwal.

The company is developing the new pipeline infrastructure to cater to the rising demand for liquefied petroleum gas (LPG) from the rural areas and building connectivity for the two new LPG import terminals being set up by IOC at Kochi in Kerala and Paradip in Odisha.

India’s total LPG consumption stands at 18 million tonnes (mt) annually and around half of the supply is met through imports. The consumption is set to grow to 25 mt by 2022, potentially growing at 11-12 per cent a year. A bulk of this rise in LPG usage would come from new connections in the rural areas.

“In order to cater to the rising demand, IOC has drawn up plans on infrastructure development and improving logistics for movement of gas. Towards this, IOC will construct one pipeline from Paradip to Muzzafarpur touching Haldia, Durgapur and Patna involving a total cost of Rs 2,700 crore,” IOC chairman and managing director B Ashok had said last week.

IOC’s total pipeline capacity currently stands at 80 mtpa, accounting for 60 per cent of India’s pipeline infrastructure. This includes 40 mtpa of crude oil pipelines and 40 mtpa of product pipelines. In addition, the company operates natural gas pipelines with a capacity of 9.5 million standard cubic metres a day. The company registered a net profit of Rs 5,273 crore in FY15, a 25 per cent dip from Rs 7,019 crore in the previous financial year. Total income also declined seven per cent to Rs 4,41,670 crore.