The petroleum ministry today approved the shifting of the delivery point for the crude oil from Rajasthan to Salaya in Gujarat, the company said in a statement.
The shift would essentially make the $750 million pipeline part of the oil field. Cairn could recover the cost of laying the pipeline from the profits it earns from the sale of oil from the field.
The government will begin getting a share of the profits from the sale of the oil once the companies developing the oil field recover their expenditure.
The Rajasthan government had earlier opposed the shifting of the delivery point to Gujarat saying it would result in loss of tax revenue.
Cairn, the operator of the Rajasthan field, will now have to submit a revised field development plan for the Rajasthan oil field to the Directorate General of Hydrocarbons (DGH), the body which regulates the oil exploration and production sector.
Cairn and ONGC, the 30 per cent partner in the field, are laying a special pre-heated pipeline from the oil field in Barmer to Salaya in Gujarat as the oil is "waxy" and coagulates at normal temperatures.
Cairn CEO Rahul Dhir said the consortium had already spent $1 billion in the field and would invest an additional $2.6 billion in the development over the next two years.
Work on the pipeline has already started with Cairn giving the contract to Larsen & Toubro last week.
Cairn plans to begin producing oil from the field in the second half of 2009. It recently raised its estimated peak production level for the field to 175,000 barrels per day (bpd) from 150,000 bpd. This would raise the country's oil production from domestic fields by around 25 per cent.
