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Rediff.com  » Business » ONGC, Cairn settle Rajasthan pipeline issue

ONGC, Cairn settle Rajasthan pipeline issue

January 15, 2007 14:38 IST

State-run Oil and Natural Gas Corporation on Monday said it has resolved differences with Cairn India Ltd for building a $340-million pipeline to take crude oil found in Barmer district of Rajasthan to Gujarat.

"We have reached an understanding for setting up a pipeline to take Rajasthan crude to Gujarat," ONGC chairman and managing director R S Sharma told reporters in New Delhi.

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 the crude in the interim period. We can sell the crude to Indian Oil Corp, Mangalore Refinery or private sector refiners," he said.

Sharma said the dispute earlier was on if MRPL, which was official offtaker of the Rajasthan crude, alone would be responsible for laying the pipeline.

"Now, we have an understanding that the pipeline will be jointly built," he said.

The pipeline construction will take 12-18 months.

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 a 70:30 ratio.

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.
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