Oil firms to import costlier propane

Oil companies will import costlier propane to tide over the LPG shortage being faced by the country. Butane, which is cheaper, is in short supply in the international market.

The petroleum ministry has asked Reliance Industries Ltd to postpone its planned 45-day shutdown which began this month. Oil companies have also decided to suspend temporarily allocation of new and double barrel connections till the time the situation improves.

"There has been a shortage of LPG in the country, but the situation is nowhere as alarming as is being made out," said an IndianOil executive, adding that the projected demand for LPG between October-December 2005 was 2.712 million tonnes. There is a 3.6 per cent shortfall with 2.614 mt supplies.

IndianOil has deferred the planned shut-down of its Barauni Refinery and a request has been made to GAIL and Oil and Natural Gas Corporation to maximise LPG production over and above the planned numbers during October-December.

Efforts were also being made to step up the production of LPG at refineries, said officials, adding that these measures would add 32,000 tonne.

The balance shortfall is being met through the already-arranged 14 additional cargoes of 13,000 tonne each, in addition to the original planned ship parcels. Oil companies will buy 13 more cargoes, over and above those planned and already finalised.

The companies have requested the petroleum ministry to ask the shipping ministry to advise the Kandla port for prioritised berthing of butane/propane cargoes, as imports planned at Kandla during this period are much higher than the normal imports.

The government has also asked companies to intensify checks on unauthorised use of LPG, especially diversion of domestic cylinders for commercial purposes. LPG availability in the country has suffered because of low availability in the international market, where the demand for the gas has shot up because it is being used as a substitute for naphtha.

The LPG inventory came down between April-September 2005 because of unplanned shut-downs due to floods and reduced production at some refineries. A total shortfall of 458 TMT has accrued on this account.