The Hindu Business Line : IOC scouts for gas for internal use at Haldia unit

Taking a cue from a number of hydrocarbon strikes in Orissa and the East coast in general and Reliance's investment in gas pipeline to Haldia, IndianOil has began scouting for approximately 1.2 million standard cubic metre of gas a day (mmscmd) for internal consumption of its Haldia refinery.

According to sources, apart from Reliance - which has promised supply of natural gas to the state by 2009-10 - IOC is also in discussion with its public sector counterparts GAIL and ONGC for possible supplies in the region. GAIL has plans to bring natural gas to the State by 2011.

Natural gas will replace roughly 300,000 tonnes of costly light sweet crude consumed by Haldia refinery to produce low sulphur furnace oil and naphtha for use as feedstock in the captive power plant (60 MW), hydrogen plant and boiler.

Use of low sulphur crude is mandatory to abide by the environmental stipulations on emissions of power plant and other plants. As per the existing guidelines, power plants cannot use feedstock having more than stipulated sulphur content.

IOC is investing Rs 2,869 crore in Haldia for enhancing capacities from six to 7.5 mt and improvement in product quality as well as yield. The project - slated to complete in December 2009 - also envisages expansion of the existing captive power plant from 20 MW to 60 MW.

"If natural gas is available, Haldia refinery will be run solely on cheaper crude leading to substantial savings and rise in refining margin. Also, natural being a cleaner feedstock, the environmental concerns will be far less," an IndianOil official said.

Interestingly, IndianOil is not alone to join the race for cornering gas supplies. While SAIL has expressed firm interest in lifting the entire CBM production of ONGC in Jharkhand, Damodar Valley Corporation and state generation agency West Bengal Power Development Corporation Ltd (WBPDCL) have expressed interest in exploring the gas market.

"Our study shows that there is tremendous interest in using natural gas at market price among industries in Eastern region. Accordingly we foresee emergence of a strong gas market in the region once it is available," said a source in ONGC which has plans to market gas produced from its Mahanadi finds in the region.

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