The Hindu Business Line : Cairn’s Barmer-Jamnagar pipeline to be ready by 2009

Bevta (Gujarat), June 24 The 600-km pipeline to transport crude from India’s biggest onshore oilfield to refineries across the country will be ready by the second half of 2009 as construction work began today at Bevta in Banaskantha district of Gujarat, about 200 km from Ahmedabad.

The cost of the pipeline-laying project, entrusted to Larsen and Toubro, would be around Rs 3,200 crore.

Thirty-two gas-powered, one megawatt turbines (heating stations) would also be set up along the pipeline at a distance of 18 to 20 km from each other to keep the temperatures at 65 degree Celsius for smooth passage of crude through the country’s first heated and insulated pipeline from Barmer in Rajasthan to the coastal location at Salaya in Jamnagar district of Gujarat. This would cost an additional Rs 4 crore a megawatt each, totalling about Rs 130 crore.

Cairn India Ltd, which is currently active in four hydrocarbon blocks in Rajasthan (Mangala, Bhagyam, Aishwarya and Raageshwari), has requested to the Union Government for extension of the pipeline from Salaya to Bhogad .

If this is approved, the project cost would be more, a Cairn official told Business Line.

At peak production, Mangala is expected to produce 1,75,000 barrels of oil a day and boost domestic crude production by approximately 25 per cent. The price of crude production, at current levels, would be nearly $ 5 (Rs 200) a barrel. By the time it reaches its destination, however, crude’s cost would go up by an more than $1 a barrel as transportation cost, Sir Bill Gammell, Chairman, Cairn India Ltd, said here, after the traditional puja marking the formal commencement of work.

On schedule

The oilfield development work at Cairn India’s discovery in Rajasthan is proceeding on schedule. The integrated upstream and pipeline development is also on course to produce oil from Mangala in the second half of 2009, he said.

At Salaya, crude would be handed over to the Government which would then funnel it to public or private sector refineries, he said.

Sources said ONGC was originally supposed to set up a refinery to refine the Rajasthan crude, preferably at Mangalore, but later dropped the idea.

So, crude would now be evacuated at Jamnagar where the Government may decide to entrust it to either the public sector refineries elsewhere or to the private sector refineries of Reliance and Essar in Jamnagar itself.

According to Mr K. Venkataraman, an L&T official, this would be the world’s longest insulated crude pipeline, alongside the gas pipeline.

Almost 80 per cent of the contracts to construct the pipeline have been awarded to Indian companies.

The integrated engineering, procurement and construction (EPC) contract for the pipeline is being carried out by L&T, while the line pipe has come from Jindal Saw Mill, Mundra (Gujarat).

The Ministry of Petroleum and Natural Gas had, on April 30, conveyed its agreement to shift the delivery point of Rajasthan crude under theRJ-ON-90/1 Production Sharing Contract (PSC) from Barmer to Salaya. In RJ-ON-90/1, Cairn has made more than 20 discoveries. Cairn India is currently focused on exploration and production in India where it has a working interest in 14 blocks, two of which are producing hydrocarbons. The company holds material exploration and production positions in western and eastern India along with new exploration rights elsewhere in India and Sri Lanka.

In Rajasthan, Cairn India operates Block RJ-ON-90/1 under a PSC signed in 1995. The main development area (1,858 sq km), which includes Mangala, Aishwarya, Saraswati and Raageshwari, is shared between Cairn India (70 per cent) and ONGC having exercised their back-in-right for 30 per cent. A further development area (430 sq km), including Bhagyam and Shakri, is also shared between Cairn and ONGC in the same proportion.

India currently imports about two million BOPD and produces nearly seven lakh BOPD itself, of which approximately 50,000 BOPD comes from the Cairn India operated Ravva field on the east coast of India. The new pipeline would add 1,75,000 BOPD to India’s current production of seven lakh BOPD.

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