• Proposal includes overland tap-off point to supply Trinco
• Can supply petrol, diesel, and kerosene to SL via pipeline: LIOC
• Says pipeline is cheaper to operate than a refinery
• SL needs to put in place new regulations, guidelines, redundancies

The proposed Indo-Lanka petroleum pipeline project is gathering steam, with energy security being one of the core topics that was discussed during last week’s historic two-day visit by President Ranil Wickremesinghe to India.

The pipeline is mooted as a more cost-effective solution for India to support the Sri Lankan energy market.

However, Sri Lanka is to appoint an expert committee to evaluate the proposal, with some senior officials pointing out that a robust regulatory process, environmental assessment, and sovereign capacity-building is also required to get the most out of the proposed pipeline.

During the visit, Wickremesinghe stressed that “enhanced connectivity for the future India-Sri Lanka economic partnership” was important. The President also thanked the Indian Government and people for their strong support of the troubled island during the Covid-19 pandemic and the economic crisis that followed.

Addressing the press in New Delhi, Wickremesinghe noted cooperation with India was crucial to further Sri Lanka’s ambition to develop Trincomalee as a regional energy hub and an industrial hub. 

Citing the need to ensure Sri Lanka’s energy security, a serious concern given the experiences of the past three years, Wickremesinghe said: “Prime Minister Modi and I believe that the construction of a multi-project petroleum pipeline from the southern part of India to Sri Lanka will ensure an affordable and reliable supply of energy resources to Sri Lanka.”

High-level discussions

According to Minister of Power and Energy Kanchana Wijesekera, the proposed Indo-Lanka petroleum pipeline has been discussed in a high-level meeting in New Delhi.

“Delegation led by HE President Ranil Wickremesinghe, discussed energy cooperation policy plans and investments in the bilateral discussions that was held in New Delhi, to boost the economic and energy partnerships between the two countries… India-SL grid connectivity, green hydrogen, oil pipeline connectivity, and energy sector investments were discussed during the discussions held with HE Prime Minister Narendra Modi, HE President Droupadi Murmu, senior Govt. officials and investors,” Wijesekera said in a Twitter post yesterday (22).

The project is envisaged to pump petrol, diesel, and kerosene to Sri Lanka via an undersea pipeline, the first of its kind for Sri Lanka if approved, with an overland segment that will have two tap-off points leading to Trincomalee and Colombo, The Sunday Morning learns.

The Sunday Morning last week exclusively reported that Sri Lanka would appoint an expert committee to study the proposal which has been put forward by the Indian Oil Corporation (IOC) to construct a multi-petroleum product pipeline from the new IOC-owned refinery in Cauvery Basin, Nagapattinam, Tamil Nadu, and Sri Lanka. 

Ministry of Power and Energy Secretary M.P.D.U.K. Mapa Pathirana told The Sunday Morning that since Sri Lanka had no prior experience with a cross border, seaborne pipeline, a panel of experts would need to be convened to study the proposal.

The proposal for the pipeline had been made a few months back when the Indian Energy Secretary visited Sri Lanka with an IOC delegation, The Sunday Morning learns.

IOC pipeline system

When asked about IOC’s experience building petroleum pipelines, Lanka Indian Oil Company (LIOC) Senior Vice President (Administration and Engineering) Jadhav Shashank told The Sunday Morning that the Indian Oil Company had significant experience in building and operating oil pipelines. Shashank told The Sunday Morning that pipelines were the safest mode of transporting petroleum products.

“The IOC caters to about 55% of the Indian market. That is the market share. The biggest strength of the IOC is its pipeline structure. IOC has the largest pipeline structure owned by a company in the world and pipelines are the safest mode of transporting petroleum products, which are highly combustible. When you transport by road via bowsers or by ship, there is always the probability of contact with air and a combustible source. The pipeline is a closed system and as such, safer. It is also one of the cheapest modes of transporting petroleum,” Shashank explained.

“IOC operates a network of more than 15,000 km-long crude oil, petroleum product, and gas pipelines with a throughput capacity of 94.56 million metric tonnes per annum of oil and 21.69 million metric standard cubic metres per day of gas. Cross-country pipelines are globally recognised as the safest, cost-effective, energy-efficient, and environment-friendly mode for transportation of crude oil and petroleum products,” the IOC said.

He opined that when handling large volumes of petroleum products, pipelines were the way to go, and, bar sabotage or external accident, leakage and pilferage from a pipeline was almost impossible. “The pipeline method involves less human input, less chance of error, and is significantly cheaper to operate. It is the most green and efficient way to move petroleum products,” he said.  

Explaining how the pipeline could be used to transport multiple types of fuel, Shashank pointed out that products were pumped out in batches with a variable pressure to move different volumes to the top-off point where when the fuel was separately stored, the individual products do not mix within the pipeline. He pointed to the cross-border pipeline with Nepal as a success story.

Indo-Lanka pipeline, a more cost-effective option?

Commenting on the proposed Indo-Sri Lanka pipeline, Shashank said that due to Sri Lanka’s total requirement only being around four Million Metric Tonnes per Annum (MMTPA), operating a refinery would not be cost-effective to supply the domestic market alone, thus the pipeline was a more suitable solution.

“Sri Lanka’s requirement is about four million MMTPA. With any refinery, if we want to operate one as of now, the threshold limit of profitability is 10 MMTPA, so if you construct anything less than that, it is very costly to operate. The six MMTPA are left for export from Sri Lanka, which is really a difficult task. Since we (IOC) are already building a new refinery in Cauvery Basin – we call it CBR – India is ready to supply additional products (to Sri Lanka). Plus, IOC has linked CBR to all other refineries through pipeline so when there is a shutdown (of CBR), there are other refineries which can continue the supply,” Shashank said, claiming that such a system could ensure uninterrupted supply of fuel even if the CBR were to go offline once every two to three years for scheduled maintenance.

When asked about details of the proposal, Shashank said that the proposed pipeline from CBR in Nagapattinam, Tamil Nadu to Sri Lanka was envisaged to be around 600 km in length, with around 65 km of pipeline on Indian land, with a subsea component of about 70 km.

“It will be a pipeline of around 600 km from CBR, so about 65-70 km pipeline on Indian land. There is also a 65-70 km subsea pipeline. We have proposed one T-point (tap-off point) near Vavuniya, to supply Trincomalee, as it is the Sri Lankan Government’s plan to develop Trincomalee as an energy hub. With that tap-off line, which may be around 100 km, the total pipeline length may be about 700 km,” Shashank told The Sunday Morning.

When asked where the pipeline would come ashore on Sri Lankan territory, Shashank said the proposed area was the northwestern coast of Jaffna peninsula, which is one of the closest locations to the tip of Kodiyakarai in Tamil Nadu, across the Palk Strait. The proposed tap-off point is said to be a location close to Paranthan.

“On the Indian side, from CBR in Nagapattinam it will come to Kodiyakarai and then the subsea pipeline will continue to Jaffna. Then on to the tap-off point and the rest to Colombo,” Shashank said.

Shashank opined that Sri Lanka, which is at present dependent on shipping in petroleum products and crude oil, was vulnerable to external issues of supply chain disruptions and situations such as Covid.

“Now Sri Lanka will have a second option with the pipeline and the pipeline option will also definitely be a cheaper option. Sri Lanka will have access to cheaper fuel,” he said.

The LIOC official added that the proposal included potential for future growth of supply, which could be increased in line with Sri Lanka’s requirements in the future.

Need for proper regulation and contingency preparedness

While President Wickremesinghe’s policy direction may well see Sri Lanka forge better linkages with neighbouring India, which has been steadfast in supporting Sri Lanka to weather the economic crisis, several local officials The Sunday Morning spoke to noted that Sri Lanka’s lack of a regulatory system for such pipelines and energy linkages could create challenges in implementing such projects and sustaining them.

A senior official at the Ministry of Environment pointed out that while the project may be beneficial, a thorough Environmental Impact Assessment (EIA) would be needed to ensure local fauna and flora, especially as they play a key part of the tourism industry, would not be adversely affected by the project.

“We have already seen what happens when you clear and build settlements in elephant corridors. When we have oil spills near our coast, are we prepared? Don’t get me wrong – energy security is very important, provided we don’t damage our environment and are prepared for contingencies,” the Environment Ministry official said on terms of anonymity.

A senior official at the Ceylon Petroleum Corporation (CPC) pointed out that while the pipeline could supply Sri Lanka’s fuel requirements, and potentially do so at a cheaper rate, the sovereign fuel storage capacity should be increased to maintain a buffer stock for at least 40 days.

“The Sapugaskanda Refinery is in a very poor state; it only produces about 20-25% of the local requirement and that too in an inefficient manner. If we don’t have money to build a new refinery, then we ought to at least increase our storage capacity to about 40-60 days. What if there is another Gulf War or the Suez Canal is blocked due to an Iranian-US conflict? Crude supply will be disrupted and not even India can solve that issue. 

“India will prioritise its national needs. You can’t blame India for that. We need redundancy and buffer stock to survive shocks like that. What if relations between India and Sri Lanka sour again in the future? See what Russia did to Europe with its pipeline. We need to learn from these examples and be prepared,” the CPC official said.