New Delhi, June 3: Indian Oil Corporation’s Rs 1,200-crore Paradip-Haldia oil pipeline will be completed by July-end and crude is expected to start flowing to the Haldia and Barauni refineries in August.

The pipeline was initially scheduled for completion in March this year but was running two months behind time as heavy rains during the monsoons last year had delayed work. The date for completion was then extended to June.

However, turbulent weather out at sea has disrupted operations again during May this year as it had become dangerous to anchor support vessels at the site of the single-point mooring (SPM) in the deep sea off Paradip. It had also become impossible for the divers to carry out the installation of the SPM in the rough sea. This has delayed the setting up of the SPM by another month.

The revenue of the Haldia port is expected to shrink this fiscal as the crude oil traffic will be diverted to Paradip.

The pipeline will enable IOC to save Rs 500 crore per year in transport costs and will boost the profitability of both the Haldia and Barauni refineries.

At present, crude comes in medium-sized ships to the mouth of the Hooghly from where smaller vessels undertake lighterage operations to bring it in to Haldia. This trans-shipment is a costly affair and has adversely impacted the operations of the Haldia refinery.

The lower cost of transporting crude will enable IOC to expand the capacity of the Haldia refinery from 4.6 million tonnes to 6 million tonnes immediately and to 7.5 million tonnes by April 2009.

In the long-run, the increased output of the refinery will generate higher revenues for the state and more outgoing traffic for the port as well. This is expected to partially offset the revenue loss from lighterage operations.

According to company officials, the expansion of the refinery cannot take place under the current high-cost transport system at the Haldia port.