In a move that can help the oil marketing companies rapidly establish necessary infrastructure for transport of crude, petroleum products and gas, Indian Oil Corporation (IOC) has proposed to the government to allow usage of railways land for laying pipelines.
On behalf of the oil marketing and exploration and production companies, IOC has submitted a report to the Ministry of Petroleum and Natural Gas (MoPNG) requesting it to rope in Indian Railways and allow it to free up the land along its railways tracks to be used for setting up a pipeline network.
"We have proposed a revenue sharing model under which both the railways and the oil companies can benefit from the scheme. The idea is to use the railways land for a fee and use the land to lay the pipelines," said U K Dhoot, general manager – project monitoring, IOCL, at an oil and gas conference organised by India-Tech Foundation.
The process of setting up new pipelines across the country has become extremely time consuming as it requires several clearances like land, environmental etc. Dhoot explained that IOC currently has a pipeline network of 12,000 km across the country for transporting crude and petroleum products from it's 11 refineries which have a combined capacity of 65 million tonnes per annum (mtpa), but have transport capacity of just 36.6 mtpa.
Dhoot, however, agreed that there could be some conflict of interest issues with the Indian Railways as railways have a substantial share of transport of petroleum products for the oil marketing companies which also include Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL).
"We have requested the government to bring out a conducive policy which is a win-win for both, as India has serious dearth of pipeline network for crude sourcing or supplying of petroleum products," he said.
As per the Petroleum Planning and Analysis Cell (PPAC), India currently consumes up to 220 MT of crude annually and processes it to produce an equal amount of petroleum products such as petrol, diesel, kerosene, fuel oil and lubricants. Thus, a total of 440 MT of pipeline transportation capacity is required annually to take the supply to the respective sources.
Between the three oil marketing companies and the three main crude supplying companies – Oil and Natural Gas Corporation (ONGC), Oil India (OIL) and Cairn India (CIL), the total existing pipeline capacity stands at 215 mtpa with crude capacity at 130 mtpa and 85 mtpa of petroleum products. Thus, the pipeline capacity is falling short by 225 MT every year.
Roadways, railways and coastal network equally try to meet this shortfall in pipeline capacity. Dhoot pointed that while transportation is currently being met through these sources, in case of the railways, the ramp up of capacity is not enough to meet the growing demand. PPAC points out that both – the demand of crude oil and production of products – are growing at the rate of 3% annually. Thus a pipeline network along the tracks is an economical option, Dhoot added.