The Telegraph
Since 1st March, 1999
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IOC to use Oil India pipeline in Assam

New Delhi, March 31: An Oil India (OIL) pipeline put in place to carry crude oil from Assam to the Barauni refinery will now be used by Indian Oil Corporation (IOC) to reverse pump crude from the Ravva oilfields to the Bongaigaon refinery. This is considered the most cost-effective way of feeding the refinery in Assam.

Although some time has been lost due to various formalities that IOC had to complete with OIL before taking over the pipeline, the high-quality crude will start flowing to the Bogaigaon refinery next month.

Crude will be first brought to Haldia from the eastern offshore Ravva fields from where it will be pumped to Barauni through the existing IOC pipeline. It will be stored in a tank near the Barauni refinery, which is being linked to the old OIL pipeline. Apart from the last-mile linkages for the pipeline, IOC is installing new pumps to send crude in the reverse direction.

A senior IOC official told The Telegraph that this will reduce transport costs for the refinery and the pipeline, which was lying waste due to the shortage of crude in Assam, will now be back in constructive use. The allocation of the 1.5-million tonnes of the high-quality sweet Ravva crude is aimed at improving the economics of the beleaguered Bongaigaon Refineries and Petrochemicals (BRPL). As part of the revival process, the refinery was handed over to cash-rich IOC in March 2001.

While Indian Oil has succeeded in turning around the refinery, it still has a difficult phase ahead. Large investments would have to be made to improve the quality of petrol and diesel to meet Euro-II fuel specifications that have to be implemented throughout the country by April 2005. This will be followed by further upgradation to Euro III norms by April 2010.

BRPL would have had to raise around Rs 500 crore as costly loans to upgrade its fuel quality to Euro II norms which would have impacted its bottomline.

The sweet crude is easier to process and also yields better quality products. As a result the high-cost investment required to upgrade the quality of petrol and diesel can now be put off. This welcome breather will enable BRPL to consolidate its finances till it has to eventually take the plunge for meeting the Euro III norms.

BRPL has a 2.35-million tonne capacity but has been running below its full capacity as the output of crude in Assam has been falling short of its projected target. The 1.5 million tonnes of Ravva crude will thus form a major portion of its throughput.

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