The Hindu Business Line : IOC's Paradip projects run into rough weather

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Kolkata Feb. 16 Indian Oil's Rs 1,178-crore project to set up a single point mooring (SPM) facility at Paradip in Orissa, the creation of a storage facility and the laying of a crude pipeline to Haldia in West Bengal, is believed to have run into rough weather.

The project was scheduled to be commissioned in March 2006. However, according to industry sources, the project is far from nearing completion with substantial work still pending both on the pipeline as well as on the SPM front.

When contacted, IOC official sources did not comment on the issue.

Leaving aside chances of a rise in project cost, the delay would affect IOC's saving on freight costs and posting higher margins at both Haldia (now being expanded to 7.5 million tonnes) and Barauni refineries. According to figures previously released by the company, the pipeline would have reduced freight cost by no less than Rs 500 a tonne and impacted positively the gross refining margin (GRM) at the two refineries by $1 per barrel.

Haldia Port gains

The development, however, brought unexpected gains for Haldia, which was expecting loss of 11 million tonnes cargo — roughly 26 per cent of the total cargo handled by the port — once the pipeline was implemented.

According to industry sources, the project has run into trouble on several fronts. The 330-km long underground pipeline will pass through a number of forests and perennial rivers, including the Mahanadi.

While environmental issues in securing right of way through forests in Orissa have delayed the pace of work substantially, sources said that IOC was now facing technical problems in horizontal drilling under Mahanadi.

Prolonged monsoon, a mere three-month weather window between January and March and a comparatively rough and deep sea, have also posed problems for completion of the SPM.

Controversial past

Controversy has dogged the Paradip-Haldia pipeline from the time it was proposed in 2002-03. While IOC has complained about limited draft availability at Haldia leading to high freight cost, the West Bengal government feels that the project would sound the death knell for the port.

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