ONGC, Cairn to build $340mn Rajasthan pipeline

Oil and Natural Gas Corporation (ONGC) and Cairn India have resolved differences for building a $340 million pipeline to evacuate crude oil from Barmer, Rajasthan to Gujarat.

"We have reached an understanding for setting up a pipeline to take the Rajasthan crude to Gujarat," R S Sharma, chairman and managing director, ONGC, said today.

Sources said the petroleum ministry has given its consent to include the pipeline cost in the field development plan for the Rajasthan fields. Like the cost for developing Mangala, Bhagyam and Aishwariya fields, the pipeline investment will also be shared between Cairn and ONGC in the ratio of 70:30. The construction will take 12-18 months.

Sharma said the option of building a refinery in Rajasthan was still open, but investment would be made only if the state government gave fiscal incentives. "Irrespective of the fact that the refinery is built or not, we have to build a pipeline to evacuate crude in the interim period. We can sell the crude to IOC, MRPL or private sector refiners," he said.

Sharma said the dispute earlier was if MRPL, which was the official offtaker of the Rajasthan crude, alone would be responsible for laying the pipeline."Now, we have an understanding that the pipeline will be  built jointly," he said.

Cairn-ONGC will build a 340-km line to IOC's Viramgam terminal in Gujarat. Viramgam is connected by pipelines to IOC's Koyali, Panipat and Mathura refineries - the potential customers of Rajasthan crude.

A smaller pipeline can then be built to the west coast or Jamnagar where Reliance Industries and Essar Oil have refineries.