Bid & Tender
Land Acquisition Affecting Indian Oil’s Pipeline Projects

Date : Sep 20, 2016

Indian Oil Corporation Ltd’s (IOC) pipeline projects are facing problems due to issues related to land acquisition, according to Anish Aggarwal, director-pipelines at India’s largest refining company. This comes in the backdrop of the public sector unit constructing 20 pipelines at an investment of Rs.200 billion to be operational by 2022. “Land acquisition is causing a problem for our linear projects,” said Aggarwal.

 

The issue assumes importance given the role envisaged for IOC’s pipeline network to improve the energy access for India’s citizens. IOC has a network of 11,746km at present which is expected to go up to around 17,000km, thereby increasing the throughput capacity from 85.5 million ton per annum (mtpa) to 102 mtpa. Of this, 4,867km transports crude oil, 6,739km is used for product transportation and 140km is meant for gas.

 

As per the 14 September report about IOC’s goal to generate 15% of revenue from its gas supply and distribution business by 2021 from the current level of 5%. IOC has a refining capacity of 80.7 mtpa through its 11 refineries and accounts for 35% share of India’s refining capacity. Pipelines will have to play an important role in helping India achieve the target of natural gas contributing 15% to India’s energy mix from the current level of 6.5%. According to petroleum planning and analysis cell, India currently has a gas pipeline network of 16,250km with a capacity of 386.53 million standard cu. metre and a pipeline grid of 12,687km.

 

Experts believe that the land acquisition requires immediate attention. “Land acquisition has been a serious problem. A lot of projects are stalled because of this and these can only be resolved with government intervention,” said Raju Kumar, partner-oil and gas at consultancy firm EY. The National Democratic Alliance government also plans to set up a common hub for India’s gas pipelines for market price discovery of natural gas in the country. A gas hub is a physical point where several gas pipelines come together or intersect. It is a trading place for gas at market determined prices.

 

However, it is an ambitious task given the falling domestic production. India’s domestic gas production fell by 4.7% to 31.14 billion cu. metres (bcm) in financial year 2015-16 from 32.69 bcm a year ago. According to a report by consultancy firm EY, India’s 39 cu. metres per capita of natural gas consumption lags far behind the world average of 469 cu. metres. The country’s share of natural gas in the primary energy mix is also far behind the global average especially due to a sharp drop in domestic production.