IndianOil, Essar Oil's crude pipeline link at Vadinar may fructify
New Delhi   31-Jan-2008
The long-delayed interconnection of crude pipeline between IndianOil and Essar Oil Limited (EOL) at Vadinar in Gujarat is likely to take shape soon. With interconnection, the concerned companies can rely on the other's pipeline for oil transport in case of an emergency. Last month, the petroleum ministry directed both the companies to go ahead and implement the interconnection proposal. According to sources dose to the petroleum ministry, "Essar Oil submitted a proposal to IndianOil inl996tointerlinkthetwoSPM (single point mooring) systems at Vadinar to provide flexibility in operation to both companies in case of unforeseen outage of SPM of either company." The ministry also recommended that the commercial arrangement between the two companies be mutually decided between them. However, IndianOil earlier said that the company does not find any advantage in interconnecting both the pipelines. IndianOil representatives reportedly felt that in the event EOL's SPM goes out of order it may take more than three to four months to bring the system up. During that period, IndianOil may incur demurrage of their own vessels in case they are asked to unload crude for EOL. Sources also said that the idea of interconnection of crude systems at Vadinar, considering the sensitive location of the facilities in the Gulf of Kutch, was mooted in February, 1997. IndianOil had agreed, in principle, to the suggestion of interlinking the facilities. On the other hand, EOL agreed on the basis that the interconnection will be borne by EOL However; the scheme could not be operational for want of approval by IndianOil. Moreover, Essar also submitted that the scheme would be extremely useful in case of outage of any of the SPM at Vadinar, the absence of which could lead to deficit in the supply of petroleum products to the northwest, Essar Oil has an SPM in Vadinar able to handle vessels up to 350, 000 DWT. Similarly, two SPM systems of IndianOil are operating at Vadinar to unload the crude oil received from tankers including very large crude oil carriers (VLCCs) with offshore pipelines. At Vadinar, Indian Oil has a vast crude oil tank farm of 13 tanks with a total capacity of 0.773 MMT.