Commodity Online
In a major boost to oil exploration in India, the Centre has given the green light to Cairn India to proceed with the development of a pipeline to transport oil from its flagship fields in Rajasthan.

The decision comes after the wait of almost one year.
The company, along with ONGC, has invested over $1bn in Rajasthan, and plans to invest an additional $2.6bn in the development over the next two years.

Cairn needs the pipeline to transport oil 585km from its Rajasthan fields in the interior to refineries on the coast.

The decision comes as India is conducting its seventh auction of oil exploration blocks, known as the New Exploration Licensing Policy VII, as part of which it is hoping to attract more global oil groups to invest.

Controlled by London-listed Cairn Energy, Cairn India had applied to the government to shift the delivery point for oil from its Rajasthan fields to Salaya on the coast of Gujarat.

Cairn had wanted the shift to be incorporated into its production sharing contract so that it would be eligible to recover the cost of the pipeline under the normal terms of the agreement.

Following the approval, Cairn will be able to do this, though it will also have to revise its field development plan for Rajasthan, reported London’s Financial Times.

It means there could still be delays, as the company will need a separate approval for the revised version of the field development plan.

Cairn has started preliminary work on the pipeline project, awarding contracts and breaking ground for a facility along the route.

The approval for the pipeline means the field could start operation on schedule in the second half of next year.

The project, which will have capacity of 175,000 barrels a day, is seen as crucial for India, which imports more than 70 per cent of its oil needs.