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New policy moots sharing of oil pipelines

New Delhi, Dec. 5: The government today announced an oil pipeline policy that allows petroleum companies to set up trans-Indian pipelines, provided they allow other oil companies to use at least 25 per cent of the carrying capacity of their line through a mutually agreed deal.

Pipeline tariff will, however, be subject to control orders or regulations that may be issued by the government, the announcement, made in the form of a note tabled in Parliament, said.

Petroleum minister Ram Naik told newspersons here today that the common carrier principle “will not apply to (existing) dedicated pipelines. Only the excess capacity can be shared... Capacity of product pipelines constructed, hereafter, would be shared.”

Oil companies interested in laying a product pipeline originating from a refinery or a port would be required to publish the proposal inviting other interested companies in the pipeline, he said, adding capacity would be shared on mutually agreed commercial terms.

However, the guidelines make it clear that companies and investors will have complete freedom in running crude pipelines originating from refineries or meant for captive use of companies. The government will give such firms unconditional right of use.

Right of use will also be granted unconditionally for product pipelines from refineries to a distance of up to 300 km or pipelines dedicated for supplying products to a particular consumer, originating either from a refinery of or from the oil company’s terminal.

Oil companies/investors interested in laying a product pipeline more than 300 km long originating from a refinery or a port for general use would be required to publish the proposal inviting other interested companies to take capacity in the pipeline.

Any oil company interested in sharing the capacity of the pipeline will be able to do so on mutually agreed commercial terms and conditions. The owner of the pipeline would then also provide capacity for the interested parties. He will have to compulsorily give up to 25 per cent of his carrying capacity, but may give up more if he so chooses.

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