Cairn India sees oil transport solution by June

Cairn India, the company which discovered the nation's largest oilfield in more than two decades, today said it hopes to find a solution for evacuation of crude oil from its Rajasthan fields by June this year.

Mangalore Refinery and Petrochemicals (MRPL), a subsidiary of Oil and Natural Gas Corporation (ONGC) and Cairn's 30% partner in Rajasthan fields, is the government-appointed buyer of the crude. MRPL, however, is reluctant to take the waxy oil forcing Cairn to look for alternate buyers.

"We are in discussions with ONGC and the government for laying a pipeline from Barmer district in Rajasthan to the Gujarat coast. We have proposed that Cairn-ONGC will share the 600-km pipeline at a cost of $700-800 million in 70:30 ratio, and sell the crude to refiners in Gujarat and elsewhere," Cairn India chief executive Rahul Dhir said today.

The pipeline will also touch Indian Oil's Viramgam pipeline terminal in Gujarat that is connected to IOC's Koyali and Panipat refineries - Cairn's potential customers.

"If the government permits, the crude can also be sold to private refiners (Reliance Industries' Jamnagar and Essar Oil's Vadinar refineries in Gujarat that can also be assessed by the planned pipeline)," he said.

From the Gujarat coast port, the crude oil can also be shipped to Mumbai refineries of Hindustan Petroleum and Bharat Petroleum. "We have progressed well on the pipeline and a solution looks in sight by June," Dhir said.

The pipeline will take 12-15 months to build and will be commissioned around the same time when the Rajasthan fields start producing in 2009.
Cairn is likely to make an application for the right of use (ROU) for the pipeline shortly.