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Cairn warns of output delay from Barmer fields

Cairn India has asked the Centre to assure Rajasthan the point of sale for the crude from its Barmer oil field would remain in the state and warned any uncertainty in this regard could affect production schedule.

, ET Bureau|
Oct 06, 2008, 01.39 AM IST
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NEW DELHI: Cairn India has asked the Centre to assure Rajasthan the point of sale for the crude from its Barmer oil field would remain in the state and warned any uncertainty in this regard could affect production schedule.

The state government is concerned over the loss of revenue due to the shift in delivery point from the Barmer field in Rajasthan to Salaya in Gujarat. The petroleum ministry on April 30 approved the shifting of the delivery point and also allowed multiple delivery points for sale of crude. Any delay in sorting out this issue could impact the deadline for oil production.

Cairn India managing director & CEO Rahul Dhir has asked the Centre to issue a clarification to the state government that the point of sale would remain in Rajasthan even as delivery point would be shifted.

���We request you to kindly take necessary action in this matter at the earliest as we believe this concern of the government of Rajasthan is adversely impacting our operations in Rajasthan and could significantly delay the start of production,��� he wrote in a letter to the petroleum ministry.

Cairn India, which has started field development along with the 600-km pipeline, is expected to produce first oil in the second half of calendar year 2009. The company claims that at peak level ��� the Mangala, Bhagyam and the Aishwariya fields ��� would produce 175,000 barrels of oil per day and boost India���s domestic crude production by about 25%.

When contacted, a Cairn India spokesperson said: ���We have written to the chief minister of Rajasthan and the sales tax issue is resolved from our side. We stand committed to deliver oil from Barmer in H2 of 2009.���

It is learnt from oil ministry sources the Centre is unlikely to give any such undertaking. ���It is up to Cairn to assure the state government that the state would not lose any revenue or sales tax (VAT) on account of the shift in the delivery point,��� an official said.

Cairn has already written to the Rajasthan government that it would effect the sales in the state and advise the buyers to set up a branch office in Rajasthan for this purpose.

���However, this is on understanding that there will be no extra tax liability to the seller and the buyer,��� it has told the state.
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