IOC Chairman Sanjiv Singh
IOC Chairman Sanjiv Singh

IOC to invest 20,000 cr in city gas projects in 5-8 years

IOC is hoping to net licences to retail CNG to automobiles and piped natural gas to households and industries in about 20 cities

New Delhi: Indian Oil Corp (IOC), the nation’s largest oil company, plans to invest 20,000 crore in city gas distribution projects in the next five to eight years as it bets big on gas business to complement its traditional oil refining and marketing business, Chairman Sanjiv Singh said on Monday.

The firm, which owns a third of India’s oil refining capacity and has 44% market share of the fuel business, sees compressed natural gas (CNG) replacing some of the petrol and diesel consumed in vehicles, and LPG getting replaced by piped cooking gas in households. It wants to be in these businesses to maintain its market leadership position.

IOC, which among all public sector units bid most aggressively for the latest city gas distribution (CGD) licences, is hoping to net licences to retail CNG to automobiles and piped natural gas to households and industries in about 20 cities. These will be in addition to nearly 10 licences the company already has.

“We put in bids for 57 out of the 86 geographical areas (or cities) put on offer in the 9th CGD bid round. Out of this, we expect to net 20 geographical areas, plus or minus one or two," Singh said. The investment in these 20 geographical areas would be at least 20,000 crore spread over five to eight years. These numbers include investments in setting up of CNG dispensing stations and laying pipelines in cities to transport gas to households for cooking purposes and industries for commercial use.

IOC, which has 80.7 million tonnes per annum of refining capacity (33% of the total in India), is looking to commission a 5-million-tonne-a-year liquefied natural gas (LNG) import terminal at Ennore in Tamil Nadu before the year end, and has booked capacity on similar planned terminals on both east and west coast. “We see piped natural gas (PNG) replacing LPG and CNG on a bigger scale in the near future and we want to be there," Singh said, adding, LPG can be an excellent feedstock for manufacturing petrochemicals.

The shift towards natural gas is also driven by environmental considerations as it is much cleaner than petrol and diesel. IOC currently operates CGD networks in Agra and Lucknow through Green Gas Ltd, its joint venture with GAIL (India) Ltd. It is also implementing CGD projects in Chandigarh, Allahabad, Panipat, Ernakulam, Daman, Udhamsingh Nagar and Dharwad through a joint venture with Adani Gas Ltd (IndianOil-Adani Gas Pvt Ltd). In the 9th CGD bid round, IOC has won rights to seven, including Coimbatore and Salem in Tamil Nadu and Guna in Madhya Pradesh, on its own, and another nine, including Allahabad, in joint venture with Adani Gas Ltd.

IOC also has a 49% share of the country’s crude and product pipeline (by length) and 44% in petroleum products with over 48,170 customer touch points.

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