The Central government has agreed to Cairn India's proposal to lay a 'pre-heated' 580-km pipeline at a cost of $600 million (Rs.2,400 crore) to transport the crude oil from its Barmer oil fields in Rajasthan to Virangam in Gujarat.

This replaces the earlier proposal for a 'mini refinery' at Rajasthan to process the crude oil. The government has shelved plans to build a mini-refinery in Rajasthan to process crude oil found by Cairn India in the state and instead will lay a pipeline to transport it to Gujarat coast for sale to refiners. The plan for a mini-refinery of 3-4 million tpa capacity to obviate the need for setting up a pipeline to transport the crude, was uneconomical and would have led to delay in start of production from the fields

The cost of laying the pipeline is to be shared between Cairn and Oil and Natural Gas Corporation (ONGC) in a 70:30 ratio.

Cairn, meanwhile, is in talks with Indian Oil Corporation, Reliance Industries and Essar Oil to process the crude oil at their refineries in Gujarat. Mangalore Refineries & Petrochemicals (MRPL), has already agreed to take 24,000 barrels per day of the crude oil.

Also See:

Cairn to seek government approval for Rajasthan pipeline (28-Mar-07)