Cairn hopes to resolve the issue of laying a pipeline to evacuate crude oil from its Rajasthan oil field by June, 2007.
“We are increasingly getting closer to a solution in talks with ONGC and the government on the pipeline to evacuate Rajasthan crude,” Cairn India CEO Rahul Dhir told PTI from Mumbai.
Cairn and its partner ONGC plan to lay a 600-km pipeline from Barmer district in Rajasthan to the Gujarat coast at an estimated cost of $700-800 million.The pipeline will have a connecting point to IOC terminal in Gujarat from where the crude can be carried to the state-run company’s refinery in Haryana and Gujarat.
Rahul Dhir said the pipeline will take 12-15 months for construction and will come up around the same time when the Rajasthan field begins oil production in 2009.
Industry sources said BPCL wants to pipe 100,000 barrels per day of Rajasthan crude to its proposed Bina refinery in Madhya Pradesh while Reliance has indicated a demand for 30,000 bpd for its existing Jamnagar refinery and a similar quantity in the upcoming refinery of Reliance Petroleum.Essar Oil can take between 30,000 to 40,000 bpd crude.BPCL and HPCL can take 30,000 bpd Rajasthan crude in their Mumbai refineries while IOC’s Koyali and Panipat refineries can each take 20,000 bpd.
Cairn is ready to start production in small quantities from its Saraswati field and it is waiting for finalising of oil sales. In another 12-months, it can put Raageshwari oil field to production but the giant Mangala field would come in 2009 when output peaks to 150,000 barrels per day.
Sources said ONGC plans to get its subsidiary MRPL de-nominated as the official offtaker of crude oil found by Cairn Energy in Rajasthan and instead sell it to refiners.
Dhir said for best results, the pipeline has to be treated in consistency with the upstream development plant which means including the pipeline in the field development cost and allowing cost recovery from sale of crude oil.
“A proposal is currently being prepared for submission to the Government seeking approval to include within the Field Development Plan a pipeline to transport Rajasthan crude from Mangala to a coastal terminal facility,” he said.
The proposed routing of the pipeline will allow access to the existing pipeline infrastructure and refinery network, with a final coastal delivery point that also affords access to the majority of India’s refining capacity.The conceptual engineering and route identification for the pipeline are at an advanced stage.