NEW DELHI: Cairn India has agreed to double the compensation to the farmers and landowners resisting construction of its pipeline project in Rajasthan and Gujarat. The proposed pipeline will connect its Rajasthan oilfield to the crude oil shipping facility at Bhogat in coastal Gujarat.
The company now produces one fifth of India’s crude oil output. It has agreed for higher right of user payment — more than double the rate applicable in the Jamnagar district — after discussions with the local authorities and policymakers, said a source privy to the development.
The last 70 km stretch of the 670 km pipeline that pumps the waxy crude oil from the Barmer oilfield to the single point mooring system in the coast is vital for Cairn’s realisation of global market price for oil as many Indian refiners are now upgrading their capacity to process such crude to improve their refining margins. Now Cairn sells its 1,40,000 barrels per day of crude mainly to Indian Oil Corporation, Essar Oil and Reliance Industries through the pipeline that reaches up to only Salaya, 600 km from the oil field.
Completing the last stretch would open up a new set of buyers including Mangalore Refineries and Petrochemicals Ltd and Hindustan Petroleum Corporation’s Vizag refinery. Cairn already has sales contracts for up to 1,60,000 barrels a day but output is expected to further go up to 2,40,000 barrels a day as the company is in the process of getting regulatory approval to maximise the field’s potentials
Construction of the last stretch of the pipeline was halted due to opposition from landowners, who with with some political support, demanded higher compensation. As per the understanding that Cairn has reached with the local authorities and policymakers, landowners and farmers would get compensation effectively more than double of what has been paid in Jamnagar district previously. Once the pipeline is installed about a metre below the surface, owners would get their land back. Land acquisition has been a major roadblock to industrial projects with the issue figuring prominently in President Pratibha Patil’s address to the joint session of Parliament on Monday which emphasised the government’s inclusive economic development agenda.