December 02, 2008

Cairn gets approval for Barmar to Salaya oil pipeline

It is reported that Cairn Energy has been granted in principle approval by India’s petroleum ministry for laying a pre heated pipeline linking its oil fields in Rajasthan to the coast of Gujarat. This 585 kilometer long pipeline will evacuate waxy crude oil to the coast for onward distribution along industries on the western coast. The pipeline will be heated along the route order to keep the waxy crude oil flowing.

The media reports cited some oil ministry officials as saying that “The approval is for the right of use of the pipeline. Now Cairn will discuss with the government the logistics, such as the route of the pipeline. The pipeline should be ready in about 18 months, in time for production to start in the first half of 2009.”

The source added that “The cost of the pipeline, around USD 600 million, would be included in the field development cost, enabling Cairn and ONGC, 70:30 partners in the field, to recover it from the sale of the oil from the field. However, Along with the pipeline, ONGC is still considering a well head refinery in Barmer.”

The official said Cairn would also be allowed to sell the oil to multiple refiners instead of the earlier approved scheme under which the entire 1,50,000 barrels per day output was to be supplied to Mangalore Refineries and Petrochemicals Ltd.

Mr P Elango of Cairn India said that it would be the first of its kind in the country. He said “Right down the pipeline, there will be 30 mini power projects, each 1 MW in size, producing power from another natural gas from a twin pipeline. The power would be used for heating up the waxy crude, enabling its flow.”