What is the tie-up between IOCL and Adani Ports that has been recently signed?
Answer
Answer
Indian Oil Corporation has recently struck a deal with Adani Ports and Special Economic Zone Ltd (APSEZ) for augmenting crude oil volumes at the Mundra Port. The Mundra Port happens to be the flagship port of Adani group and the largest port operator in India. More importantly, Adani’s Mundra port is emerging as the economic gateway for the Indian exports to the West. Here is what this deal is about.
The agreement inked between Adani Ports SEZ and Indian Oil Corp (IOCL) will help IOCL to augment crude oil volumes at the Mundra port. Currently, IOCL imports crude directly into the Mundra port in Gujarat to feed its Panipat refinery in Haryana, so Mundra has become the key pivot point for IOCL. With rising demand for crude, IOCL will expand existing crude oil tank farm at Mundra Port to blend an extra 10 MMTPA at this location.
This will support the proposed expansion of IOCL’s Panipat Refinery in Haryana. IOCL plans to raise refining capacity at its Panipat Refinery by nearly 66% to a level of 25 MMPTA (millions of metric tonnes per annum). Adani Ports SEZ confirmed that it was fully equipped to handle additional 10 MMTPA crude at its single buoy mooring (SBM) at Mundra. IOCL and Adani SEZ are confident that this would be the start of a strategic long-term partnership.
This deal will be critical to the plans of IOCL to remain a leader in the refining business. IOCL accounts for 50% of India's petroleum products with existing refining capacity of 80.55 MMTPA. It already has 15,000 KM of transportation pipeline network to support the venture. Currently, Panipat refinery in Haryana requires 15 MMTPA of crude and this is being partially handled by Mundra Port.
Under the deal, IOCL has been assigned an exclusive crude oil tank farm at the Mundra SEZ. Currently, IOCL has 12 tanks with total capacity of 7,20,000 KL. By adding an additional 9 tanks the IOCL storage capacity at Mundra tank farm goes up by 75% to 12,60,000 KL. This will be IOCL’s largest port based crude oil storage facility. IOCL will also spend Rs.9,000 crore for augmenting the pipeline capacity to 17.5 MMTPA.