Cairn India's Rajasthan oil to flow Gujarat this week

Cairn India will start pumping crude from its Rajasthan fields by the end of this week, bringing down operational costs by $3-4 per barrel. The company has completed the construction of the 590km heated pipeline — the longest in the world — connecting Barmer in Rajasthan with Salaya in Gujarat. Cairn needs to pour in at least one million barrels to ensure that it flows out at the delivery point in Gujarat. It will take about a month before the company starts selling to domestic refineries.

The British explorer has contracted to sell up to 143,000 barrels oil per day (bpd) to Mangalore Refinery & Petrochemicals Ltd (MRPL), Indian Oil Corporation, Reliance Industries (RIL) and Essar. The company is ramping up production from the Rajasthan fields to 125,000bpd by June from 30,000bpd. It will go up to 175,000bpd by the end of next year. The Rajasthan block, which comprises Mangala, Bhagyam and Aishwariya fields, is 70 per cent owned by Cairn. ONGC owns the rest. At present, Cairn transports crude from Mangala to the Kandla port by tankers for shipment to MRPL and RIL. The pipeline, once fully operational, will reduce the transportation cost to $1 per barrel from $6-7 per barrel. Overall operational cost will be $5.3 a barrel. Cairn and ONGC have spent $1billion, or Rs 4,450 crore, to build the pipeline that runs about nine feet beneath the ground.