Govt's go-ahead to Cairn pipeline plan likely tomorrow

New Delhi, June 26 (UNI) The government is expected to formally give a go-ahead tomorrow to Cairn India's proposal to lay a 580-km pipeline to evacuate crude from its Barmer fields to the Gujarat coast at a cost of Rs 2,400 crore, where ONGC is a 30 per cent partner.

The announcement will be made by Petroleum Minister Murli Deora whether a pipeline will be laid by ONGC and Cairn combined, by a special purpose vehicle or a third party, a petroleum ministry official said.

Earlier, ONGC said it was not going ahead with plans to build a refinery in Rajasthan due to poor economics and was expecting a favourable decision this week from the oil ministry on laying the pipeline to process the crude oil.

Uncertainty regarding the pipeline issue has weighed on the Indian subsidiary, in which Cairn Energy has a 69 per cent stake.

Any progress on the issue will make it much easier to assess the value of its Rajasthan acreage.

Cairn Energy Chief Executive Bill Gammell said in March that he hoped to agree a pipeline deal in the first half, which ends on Saturday.

However, should the government recommend a solution other than the one favoured by Cairn, its shares could take a hit.

Cairn is confident of delivering 1,50,000 barrels oil daily, as has been agreed by the government.

The cost of laying the pipeline is to be shared between Cairn and Oil and Natural Gas Corporation (ONGC) in a 70:30 ratio, the same as the shareholding in the oil field, laying to rest a contentious issue between the government and Cairn.

Cairn, meanwhile, is talking to IndianOil Corporation, Reliance Industries and Essar Oil to process the crude oil at their refineries in Gujarat.

Mangalore Refineries and Petrochemicals Ltd (MRPL), has already agreed to take 24,000 barrels per day of the crude oil.

''We have the option of taking more in the next 3-4 months,'' MRPL Managing Director R Rajamani said.

UNI