New Delhi: State-owned Indian Oil Corp. Ltd is set to invest heavily in logistics that will see the bulk of its petroleum product transport go off roads and railway lines into long-distance pipelines.
Chairman B. Ashok said Indian Oil is framing a Rs15,750 crore investment plan to add 7,550km of long-distance pipeline for petroleum products.
This, along with another 8,000km under-construction pipeline projects, will take the company’s total network to 27,550km over the next few years for transporting fuel from refineries to depots and LPG from import terminals to various bottling plants.
Indian Oil, at present has a pipeline network of 12,000km and throughput capacity of 85.5 million tonnes a year.
The state-owned oil firm is investing Rs17,500 crore on the projects which are under construction.
“LPG (liquefied petroleum gas) was always transported by road. Now, we have decided to build long-distance LPG pipelines. Pipelines help in transporting large volumes of products at the lowest cost and in a safer and environmentally friendly way. Our intention is to build a pipeline network for meeting the requirement of all our refineries and bottling plants,” said Ashok.
While one of the planned long-distance LPG pipelines will connect Kandla in Gujarat to Gorakhpur in Uttar Pradesh through central India, the other will connect Chennai to Bengaluru. India’s largest commercial enterprise by revenue is in the process of bringing together its entire transportation operations so far managed locally by individual refineries and plants into one integrated logistics business.
Offering a part of its capacity for fuel transport to private refiners for a user fee will fetch Indian Oil an extra revenue stream and reduce the risk involved in the refining business.
Expanding the pipeline network is also set to help Indian Oil’s diversification into gas marketing business. The company is setting up liquefied natural gas (LNG) import terminals and is venturing into city gas distribution business in a big way in partnerships with other firms. This is in line with the government’s idea of raising the share of gas in the country’s fuel mix from 6.5% to 15% by 2030.
According to Kalpana Jain, senior director, Deloitte in India, how well gas is absorbed in the economy is a function of what infrastructure is available to bring the fuel to the consumption points whether it is big industrial units such as fertilizer plants or city gas distribution.