The world's largest pipeline has been beset by delays but promises to shorten transportation times within the country, write Rituparna Ghosh and Matt Scotland
The commissioning of the world's largest LPG pipeline in India is unlikely to happen in June and may not take place until at least the second half of the year because of technical issues at Kandla port, according to local industry sources.
The 2,800km Kandla-Gorakhpur pipeline project that connects the country's import terminals on the west coast to inland demand centres all the way to northern India has been snagged by technical challenges at the site around Kandla port in Gujarat state, the sources say. The project has been postponed a number of times since prime minister Narendra Modi laid the foundation stone at Gorakhpur in 2019, in large part owing to the Covid-19 pandemic. Project engineers in early 2023 when the worst of the pandemic was over had put its estimated start at the end of the year, but by the end of 2024, state-controlled refiner IOC's pipelines director Senthil Kumar said it would be ready by March this year.
Recent local media reports citing Kumar suggest the project would now be completed by June. But this deadline is unlikely to be met given the issues at Kandla, industry sources say. The opening of the pipeline is not expected to significantly boost LPG imports given terminal capacity constraints on the west coast, but it will reduce transportation times for LPG shipments to inland markets that are currently carried by trucks, they say. IOC — which is developing the project alongside peers Bharat Petroleum and Hindustan Petroleum with shares of 50pc, 25pc and 25pc, respectively — is reducing the number of trucks it operates that carry LPG from Kandla to northern India this year, the industry source say.
The pipeline will transport around 8.25mn t/yr of LPG, around 25pc of India's total demand, IOC says. Around 340mn residential consumers in Gujarat, Madhya Pradesh and Uttar Pradesh will benefit from uninterrupted and cost-effective supply, the company says. Total investment will be around $1.2bn. LPG will be fed to the line from import terminals in Kandla, Dahej, Pipavav and Mundra, as well IOC's 276,000 b/d Koyali and BPCL's 156,000 b/d Bina refineries.
The pipeline will deliver to 22 bottling plants in India's three most populous states, with the added supply intended largely for lower-income rural users under the PMUY subsidy scheme. India's ceramics industry in the Morbi region close to Kandla also stands to benefit from propane shipments made by the pipeline, which will travel through the area, the sources say. Demand for propane in Morbi currently stands at about 4mn m³/d of natural gas equivalent while PNG use is 3mn m³/d, with prices of both similar on an energy equivalent basis, local market participants say. Demand for propane from the region's industrial sector is expected to grow in the coming years as more is imported on India's west coast.
The Kandla terminal received 3.2mn t of LPG last year, while the Dahej facility took in 1.38mn t, the Mundra terminal 812,000t and Pipavav 625,000t, Kpler data show. Around 1.53mn t of this came from the UAE, 710,000t from Qatar and 592,000t from Saudi Arabia.
