HPCL plans to set up its third LPG cavern in Gujarat

State-run Hindustan Petroleum Corporation (HPCL) is planning to set up its third Liquefied Petroleum Gas (LPG) cavern or underground storage facility, in India.

The facility will be set up in Vadodara, Gujarat with a capacity to store 60,000 tonnes of LPG, according to two officials aware of the development. HPCL plans to spend up to Rs 1000 crore in setting up of the cavern.

HPCL, country’s third largest oil marketing company, already operates one LPG cavern in Visakhapatnam, Andhra Pradesh and one under construction in Mangalore, Karnataka.

"Looking at the LPG demand going forward, HPCL is planning a third LPG cavern," said a senior industry official aware of the development.

HPCL did not reply to an email sent on 20 March.

HPCL and French energy major TotalEnergies, through their equal joint venture, South Asia LPG or SALPG, operate a 60,000-tonne capacity LPG underground storage facility in Visakhapatnam, Andhra Pradesh. The facility commenced in 2007, at an investment of Rs 333 crore. During 2021-22, SALPG achieved a total revenue of Rs 207.16 crore and recorded Profit After Tax (PAT) of Rs 110.66 Crore.

Total however, dropped out of HPCL's second LPG cavern project which is under construction in Mangalore, Karnataka.

The Gujarat cavern will also support the upcoming Kandla to Gorakhpur (2,757 km) LPG pipeline which is being developed as part of a 50:25:25 joint venture between Indian Oil Corporation Ltd and Bharat Petroleum Corporation Ltd and HPCL.

The joint venture called IHB Ltd. (IHBL) was incorporated in April, 2021 to construct, operate and manage the Kandla-Gorakhpur LPG Pipeline, longest LPG pipeline in the world, for meeting the LPG demand of the bottling plants en route the pipeline in Gujarat, Madhya Pradesh and Uttar Pradesh.

The pipeline will facilitate transportation of LPG from western coast to various demand centres in a cost effective and environment friendly manner and would replace the present road/rail mode of transportation. It would also help in meeting the LPG deficit by pipeline transportation of LPG from the west coast to bottling plants in these three states.

Being constructed at an investment of Rs.10,088 crore, the pipeline will source LPG from LPG import terminals at Kandla, Dahej and Pipavav, and also the two refineries at Koyali and Bina.

The pipeline will help optimize the logistics cost presently being incurred in LPG transportation by linking 22 LPG bottling plants directly (three in Gujarat, six in Madhya Pradesh and 13 in Uttar Pradesh) and 21 bottling plants indirectly.

Once completed, this pipeline will be capable of transporting about 8.25 million metric tonnes per annum (MMTPA) of LPG, about 25% of India’s total LPG demand.

The pipeline is expected to benefit about 34 crore people in the States of Gujarat, Madhya Pradesh and Uttar Pradesh with uninterrupted supplies of LPG.

According to sources, HPCL has completed the project feasibility report and will soon apply for the environment ministry's approval for the LPG cavern project.