New Delhi: An empowered committee of secretaries is likely to consider on 22 February Cairn India’s proposal to lay a $800 million (Rs3,192 crore) pipeline for transporting crude oil from its vast Rajasthan oil fields and recovering costs through the sale of crude oil.
Awaiting approval: Cairn India is seeking to lay a pipeline from Rajasthan to Gujarat.
The committee will consider shifting crude oil delivery point from the Rajasthan field flange to Salaya in Gujarat, along with the cost of laying the 585km pipeline from Barmer to the new sale point, including the field development. Costs would be recovered by Cairn from the sale of oil.
Official sources said the pipeline became necessary after Mangalore Refinery and Petrochemicals Ltd (MRPL), the official buyer of Rajasthan crude, said it can take only 1-1.2 million tonnes (mt) out of the 7.5mt output planned from the Rajasthan field.
MRPL would be denominated as the government nominee for buying crude from the Rajasthan fields and Cairn would be given freedom to market the oil in India. If the committee, comprising secretaries from finance, law and petroleum, agrees to the proposal, it may need to go to the Cabinet committee on economic affairs for final consent. The law ministry, which was referred the issue, has already agreed to the proposal and the finance ministry too is believed to have given a go-ahead, sources said.
The oil ministry had in 2006 mooted the idea of Cairn and its 30% partner Oil and Natural Gas Corp. Ltd (ONGC) laying the pipeline and claiming costs by including it with field development costs. But the ministry subsequently went slow, giving Cairn approval to go ahead with acquiring the “right of user” for the pipeline only in August, but delayed the cost recovery approval. It had in December referred the issue to law ministry and later sought the committee’s nod.
Sources said should there be more delays getting an approval, Cairn may have to take a decision on whether to proceed without the cost recovery clause for the pipeline or delay the date of first delivery.