Uncertainty prevails over Cairn India’s 74-km section of the 670-km-long Barmer-Jamnagar crude oil pipeline. Landowner farmers in 24 villages of Salaya and Bhogat taluks in Jamnagar district are demanding adequate compensation for the pipeline passing through their fields.

Work remains suspended unofficially since August 2010, and officially since April 26.

Even if the farmers agreed now, the company will be able to resume work only after monsoon this year.

A company source told Business Line on Wednesday that Cairn India has already increased the consideration thrice but the farmers are not satisfied. “We are waiting for a final decision from the officials concerned at Gandhinagar.”

Cairn India is “not acquiring” land but only the Right to Use, for which the farmers would be paid lease rent per square metre of land used and compensation for the crop loss in the pipeline area, if any, the source said.

The world’s longest heated and insulated 24-inch pipeline passes through two districts of Rajasthan (Barmer and Jalore) and six talukas in Gujarat (Banaskantha, Patan, Ahmedabad, Surendranagar, Rajkot and Jamnagar). Out of 670 km, 154 km length is in Rajasthan 516 km in Gujarat. Cairn India and its 30 per cent joint venture partner, ONGC, had planned to invest Rs 5,500 crore on the pipeline in Gujarat.

The pipeline reached Salaya on April 23, 2010, while construction at the Bhogat terminal was started on July 15, 2010. Subsequently, the farmers, believing that their land was being “acquired”, demanded increased compensation, eventually forcing Cairn India to officially direct its contractor, L&T, to suspend work and close its camp at Khambalia on April 26 this year.

The suspension of work was, apparently, due to a tussle between the Congress MP from Jamnagar, Mr Vikram Madam, and Cairn India on the compensation issue.

But Cairn India’s inability to lay the 74-km section , through 24 villages between Salaya and Bhogat, has deprived the IOC’s Mangalore refinery of crude oil from Rajasthan. About 8 km of the pipeline passes under the Arabian Sea to connect the Bhogat terminal to the Single Point Mooring (SPM) from where IOC transports crude oil to Mangalore.

Since June 2010, the Barmer-Salaya section of the pipeline is delivering crude to Reliance and Essar refineries as also to IOC for the Panipat refinery via Radhanpur and Viramgam.

Cairn India currently produces 1.75 lakh barrels per day (bpd) of crude from Rajasthan which is targeted to increase to 2.40 lakh bpd in 2013. It is providing 80,000 bpd to Reliance, 47,000 bpd to Essar and 25,000 bpd to IOC for its Panipat refinery. Additionally, it also supplies crude oil to the PSU’s Koyali refinery at Vadodara as per needs.

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