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HPCL, France’s Total may revive plan for LPG storage facility in Mangaluru

LiveMint logoLiveMint 18-09-2017 Kalpana Pathak

Mumbai: State-run Hindustan Petroleum Corp. Ltd (HPCL) and France’s Total SA may revive their plan to build an underground liquefied petroleum gas (LPG) storage facility in Mangaluru, said Mukesh Kumar Surana, chairman and managing director of HPCL. The cavern, which would be HPCL and Total’s second such facility in India, could be set up at a cost of more than Rs1,000 crore.

“We are reviewing the plan. Total and HPCL both have an LPG import facility in Mangalore. So rather than expanding our above ground facilities, we are reviewing the plan of a cavern in Mangalore,” Surana said in an interview after a press conference that followed HPCL’s annual general meeting on Friday.

HPCL and Total, through their equal joint venture, South Asia LPG (SALPG), operate a 60,000-tonne capacity underground LPG storage facility in Visakhapatnam, Andhra Pradesh. The facility was commissioned in 2007 at an investment of Rs333 crore. The Mangalore facility may also have a capacity of 60,000 tonnes.

Total SA’s chief executive Patrick Pouyanne, who was in India on 1 September, had expressed a desire to invest in expanding LPG infrastructure in India, including storage capacity, import terminals and distribution network. “India is a growing market in LPG, LNG and even renewables as well. We are looking at expanding in LPG— LPG plants, networks, we already have a (LPG) cavern (and are looking at) expanding storage capacity, import terminals—all the infrastructure that is necessary to expand the LPG business,” PTI quoted Pouyanne as saying.

Total SA operates in the lubricants and LPG segment in India. The company also holds 26% stake in liquefied natural gas import terminal at Hazira in Gujarat, while Royal Dutch Shell owns the remaining 74%.

A senior HPCL official said given the growing demand for LPG in the country, a new cavern made sense. “Looking at the success of the Ujjwala scheme, expansion on the LPG front has become important. Of all the households that have been given LPG connections over the last year, most of them have come back for a refill. This is an encouraging trend,” the official said on condition of anonymity.

 HPCL and Total’s facility at Visakhapatnam has been dug in rock to store LPG. It is made up of two caverns of 19 metres height, 20 metres base width and 160 metres length, with interconnections.

Besides being safe from natural calamities and hazards such as sabotage and aerial bombings, the caverns are leak and fireproof.

According to a Fitch report of 15 September, strong demand for oil products will continue and may stay above 5% in the medium term, driven by demand for three key items—petrol, diesel and cooking gas.

“We expect demand for key products—petrol, diesel and liquefied petroleum gas—to remain strong and this will ensure that the overall demand growth will remain around 5% over the medium term due to continued growth in auto sales led by cars and two-wheelers and the overall economic growth,” said the report by Fitch Ratings.

In the April-July period, demand for petrol and LPG rose more than 10% even as the overall petroleum product consumption growth slowed to 2.6% from 5.6% in the year ended 31 March.

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