New Delhi, Jan. 14 (PTI): The Oil and Natural Gas Corp (ONGC) and Cairn India Ltd have reached an agreement to build a $340-million pipeline to transport crude oil from Barmer district in Rajasthan to Gujarat.

“The petroleum ministry welcomed the idea of including the pipeline cost in the field development plan for the Rajasthan fields. Like the cost for developing Mangala, Bhagyam and Aishwariya fields, the pipeline investment will also be shared between Cairn and ONGC in a 70:30 ratio,” an ONGC official said.

Cairn and ONGC will first build a 340-km line to Indian Oil Corp’s (IOC) Viramgam pipeline terminal in Gujarat. Viramgam is connected by pipelines to IOC’s Koyali, Panipat and Mathura refineries, which will be the potential customers for Rajasthan crude.

A smaller pipeline can be built along the coast or at Jamnagar where Reliance Industries and Essar Oil have refineries. The construction will take 12-18 months.

“To include pipeline cost in the oil field development plan, the delivery point will be shifted from field storage facilities to a location at or near the coast,” he said, adding the operator gets to recover cost incurred on field development through sale of oil before the government gets its statutory dues.