Cairn's pipeline design assumes IOC sale possibility

Vol 12, PW 11 (16 Oct 08) People & Policy

Aside from the unresolved tax implications, there’s little doubt Cairn’s 24-inch crude pipeline from Barmer to Bhogat on the Gujarat coast will be the first of its kind in India.

Among the many â€کfirsts’ will be the installation of 35 power generators along the entire 673-km stretch, built to generate one megawatt of electricity each. The aim: to ensure the pipeline operates at a consistent temperature of 65-68 degrees Celsius so the â€کwaxy’ crude flows with ease.

Another â€کfirst’ is that the generators will be fired by gas from Cairn’s Raageshwari discovery through an eight-inch pipeline laid alongside the crude pipeline. An industry source tells us the total cost of the pipeline project is $879m with a 20% “contingency marginâ€‌ for unforeseen costs.

Although initial production is likely to be 125,000 b/d, the pipeline is designed to transport 180,000 b/d: well within Cairn’s peak production target of 175,000 b/d. Phase-I will see a 330-km stretch from Barmer to Viramgam in Gujarat, 70-km from Ahmedabad.

This stretch is being laid specifically with supplies to Indian Oil in mind. Cairn is planning two storage facilities along this stretch: one at Radhanpur (30,000 barrels), also in Gujarat and one at Viramgam itself (60,000 barrels).

When Rajasthan crude reaches Radhanpur, and assuming Cairn signs a COSA with IOC, the oil can flow through an IOC-owned pipeline from Mundra port in Gujarat, which supplies the Panipat refinery in Haryana. Cairn crude reaching Viramgam can likewise be diverted to an IOC-owned pipeline that feeds its Koyali and Mathura refineries.

“Viramgam is like a T-point,â€‌ Indian Oil tells us. “Two pipelines branch out from Viramgam: one to the Koyali refinery and a second one to the Mathura refinery.

â€‌ Phase-II of the pipeline is a 261-km stretch from Viramgam to Salaya – Cairn’s original delivery point. Phase-III will see a 70-km stretch from Salaya to Bhogat, the new delivery point.

A final 12-km stretch will be from the Bhogat terminal to a point in the Arabian Sea where Cairn is constructing a Single Point Mooring system for delivery to government-nominee Mangalore Refinery, or for export.