Cairn’s pipeline work starts in Gujarat

Bevta: Cairn India began the construction of the country's first heated oil pipeline, which would take the 'waxy' crude from its fields in Barmer (Rajasthan) across a distance of 600 km to Salaya (Gujarat). The company has sought to add 80 km to the pipeline length, said sources in Cairn.

The company has sought necessary clearances from the government for the extended length. The first approval of the government took a long time as the company wanted the cost of the pipeline estimated at $800 million to be a part of the project cost, which is recoverable from income from sale of oil.

The firm wants to extend the pipeline to Bhogad, 80 km from Salaya, which, sources say, is to avoid any legal issues, given Salaya's proximity to the Marine National Park.

'The delivery point of the crude oil will depend on the destination which the government approves,' said Cairn India Chairman Bill Gammell, who was in Bevta in the Banaskantha district in Gujarat to attend a ceremony to mark the commencement of pipeline construction today.

The Barmer fields are jointly owned by Cairn (70 per cent) and ONGC (30 per cent).

'About 32 intermediate power-feeding and heating stations will be built along the length of the pipeline. These stations will help in maintaining the required temperature (above 65 degree) within the pipeline,' he said.

A dip in the temperature could lead to coagulation of the crude oil.

'Next year, we hope to produce 175,000 barrels of oil a day from our Mangala, Bhagyam and Aishwariya fields. This is about 25 per cent of India's domestic crude oil production,' he said.

'Integrated upstream and pipeline development is on course to produce the first oil from the Mangala field in Rajasthan in the second half of 2009,' he said.

When asked whether Cairn was mulling a refinery or LNG terminal in India, he said the company was planning various projects in India and these possibilities cannot be ruled out.

India imports about 20 lakh barrels of oil a day. It produces approximately 7 lakh barrels a day, of which approximately 50,000 barrels come from Cairn India-operated Ravva field on the east coast of India.