Last month, the petroleum ministry directed both the companies to go ahead and implement the interconnection proposal.
According to sources close to the petroleum ministry, Essar Oil submitted a proposal to IOC in 1996 to interlink the two SPM (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, IOC earlier said that the company does not find any advantage in interconnecting both the pipelines. IOC representatives reportedly felt that in the event EOLs SPM goes out of order it may take more than three to four months to bring the system up.
During that period, IOC 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. IOC 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 IOC. 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 Wadinar able to handle vessels up to 350, 000 DWT. Similarly, two SPM systems of IOC 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.