Facility will smoothen gas supply in region

The LPG importation terminal being put up at Ennore, about 25 km north of Chennai, by Indian Oil Petronas Pvt Ltd, is nearing completion, and the region could get the gas from the end of the year, Mr U.V. Mannur, Chief Executive Officer, told Business Line today.

Indian Oil Corporation will be able to use the terminal to import LPG for supply in this region.

The implications of the availability of at least 0.6 million tonnes of LPG to Chennai and the neighbourhood are that the peak, or festival, season shortage of LPG will be eliminated; waiting time for refills will come down drastically; and industries will have the option of switching to LPG from fuels such as furnace oil.

Here is the icing on the cake: The Tamil Nadu Government will collect nearly Rs 1,000 crore more from taxes.

Today, Chennai consumes 1.2 million tonnes of LPG, 15 per cent of which is by industrial consumers. Only a third of the demand is met by local production — by Chennai Petroleum Corporation Ltd. Most of the rest comes from Mangalore, where HPCL has a facility to import and store LPG. Imagine trucks moving up and down 1,500 km for each round trip. All that movement will stop from December.

However, about 300 trucks will be needed each day to move LPG from the terminal to various consumption centres in and around Chennai.

In addition, availability of auto LPG in Chennai will get a leg up and, indeed, Indian Oil Petronas Pvt Ltd itself intends to put up a few stand-alone LPG filling stations.

The company is an equal joint venture of Indian Oil Corporation and Petronas of Malaysia. Last year, the company achieved a turnover of Rs 900 crore and net profit of Rs 100 crore.

As LPG consumption in Chennai is growing by close to 12 per cent a year, Mr Mannur reckons that there will be a market for IOC-Petronas even after the additional supply of 0.5 million tonnes when Nagarjuna Oil Refinery comes up at Cuddalore.

Work is going on at a brisk pace at the Ennore terminal, where two large tanks of 15,000 tonnes each are being put up to store the two constituents of LPG — propane and butane. The project began in the summer of 2009. The problems of obtaining various approvals and the right-of-way for the 12-km-long pipeline from Ennore port to the site have been overcome, said Mr S. Chandrababu, DGM-Project, Indian Oil Petronas.

Propane will be stored at -42 degrees C, and butane will be stored at -5 degrees C. For cooking gas the two fractions are usually blended in equal proportion. However, propane is an industrial product. If, say, Hyundai or Saint Gobain wants propane, it is available now.

(This article was published on August 30, 2011)
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