Last Updated : 15 June 2010 at 17:10 IST

Cairn-ONGC JV starts commercial operations

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MUMBAI (Commodity Online): The two oil exploration majors, Cairn India Ltd. (BOM:532792) and Oil and Natural Gas Corporation Ltd. (ONGC) (BOM: 500312), the 70:30 joint venture (JV) partners in the Rajasthan block, RJ-QN-90/1, heve commenced sales through the world's longest continuously heated and insulated crude oil pipeline.

The shares of Carin India rose by 0.10 per cent while ONGC shares declined by 2.55 per cent from the previous close on the Bombay Stock Exchange (BSE).

The 590 km long Barmer to Salaya section of the Barmer to Bhogat pipeline (670 km) is now operational with oil supplies having commenced to the private refineries from the delivery point at Salaya. Sale of crude to IOC through the pipeline is also expected to commence soon. Production is currently 60,000 barrels of oil per day (bopd).

The completion of the pipeline and related infrastructure allows the JV to sell crude to the refineries In order to gradually increase both production and sales. Pipeline sales are expected to reach 125,000 bopd. In the second half of calendar year 2010 end sales arrangements with four buyers are now being put In place for 143,000 bopd.

The pipeline has been constructed and installed In accordance with notified regulations and international best practices. The Installation and Right of Usage (RoU) reinstatement has been subject to regular review by the International Finance Corporation independent auditors.

Construction work is now set to commence on the Salaya to Bhogat section of the pipeline, on the Gujarat coast with completion targeted for 2011. The pipeline, which is part of the Mangala Field Development Plan, has been approved by the Government of India.

Sudhir Vasudeva. Director (Offshore), ONGC was quoted saying in a release that commissioning of this crude oil pipeline marks a successful completion of a technological marvel by their Joint Venture team in the Rajasthan project and would facilitate more cost-effective and augmented crude oil production directly accessing the buyers. In partnership with all stake holders, the company is committed to develop the resources in the Barmer basin and provide the nation with additional volumes of crude oil.