State-run oil marketing company Hindustan Petroleum Corp. Ltd (HPCL) is planning to build an underground liquefied petroleum gas (LPG) storage facility in Mangaluru, said a top company executive. “We are reviewing the proposal and seriously thinking of setting up a facility. An announcement will be made soon,” said M.K. Surana, chairman and managing director at HPCL. It may set up the facility with France’s Total SA, or may venture alone, added Surana. The cavern, will be second such facility in India, to be set up at about Rs. 10 billion. Total SA and HPCL both have an LPG import facility in Mangaluru.
HPCL and Total SA, through their joint venture, South Asia LPG (SALPG), operate a 60,000-tonne capacity underground LPG storage facility in Visakhapatnam, in Andhra Pradesh. The facility was commissioned in 2007 at an investment of Rs. 3.33 billion. The Mangaluru facility may have a capacity of over 60,000 ton. “In LPG sales, HPCL continued to be the second largest marketer in India with sales growth of 8.5%. It also maintained market leadership in non-domestic bulk LPG segment with over 48% market share,” the company said in its annual report.
In 2017-18, SALPG cavern received 1.686 million metric tons (MMT) of LPG, compared to 1.627MMT in the previous fiscal year, registering growth of 3.63%. It earned revenue of Rs.2.2838 billion and recorded profit after tax of Rs. 1.1821 billion in 2017-18. HPCL and Total SA’s facility at Visakhapatnam has been dug in rock to store LPG. It is made up of two caverns of 19 metres in height, 20 metres base width and 160 metres in length, with interconnections. Besides being safe from natural calamities and hazards such as sabotage and aerial bombings, the caverns are leak and fireproof.
Total SA operates in the lubricants and LPG segments in India. Last week, it sold its 26% stake in the Hazira LNG terminal in Gujarat to Shell Gas BV, a subsidiary of Royal Dutch Shell Plc. According to a senior HPCL executive, the growing demand for LPG in India is prompting the company to finalise the contours of a new cavern. “The Ujjwala scheme has brought about an unprecedented expansion for LPG. This is an encouraging trend and our plan corresponds to this,” the executive said, requesting anonymity. According to HPCL’s annual report for 2017-18, LPG consumption increased 8% following the implementation of various government schemes such as the Ujjwala Yojana.