New Delhi, April 22: Indian Oil Corporation (IOC) is planning to complete the Paradip-Haldia crude pipeline and the offshore single-point mooring project by June.

The company wanted to finish the 350-km pipeline by December, but rains slowed down the work, forcing it to push back the deadline from March to June. The pipeline is estimated to cost Rs 1,200 crore.

“The latest horizontal-directional drilling technique will be applied to 17 riverbeds and other water bodies to lay the pipeline. This has taken up more time than had been anticipated earlier as the soft soil tended to cave in at places, necessitating fresh drilling,” a senior IOC official told The Telegraph.

A pipeline on the riverbed is a safer option, since it is protected both from floods and external attacks such as a terrorist strike. The rough sea off Paradip affected work on the single-point mooring (SPM) project. The process of anchoring the support vessels was fraught with risks, making it difficult for the divers to install the SPM.

The delay, however, has given a breather to the Haldia port, which will lose crude traffic once the pipeline is commissioned. The pipeline will enable IOC to save Rs 500 crore a year on transport costs and improve the profitability of the Haldia, Barauni and Bongaigaon refineries of the company.

Crude arrives in medium-sized ships to the mouth of the Hooghly, from where smaller vessels carry it to Haldia. This trans-shipment is costly and has affected the margins of the Haldia refinery. Lower cost of crude transportation will enable IOC to expand the capacity of the refinery from 4.6 mt to 7.5 mt by April 2009.

The higher output of the refinery is expected to generate more revenues for the Bengal government and greater outgoing traffic for the port. This is expected to partly offset the port’s revenue loss from lower crude traffic.

Company officials said the expansion of the refinery was not possible as the cost of transporting crude is very high. Once the SPM and the pipeline are in place, IOC can hire very large crude carriers (VLCCs) to import crude, which can be docked in the deep waters off Paradip. The cost of transporting crude in VLCCs is half that of smaller ships.

The pipeline forms part of the Paradip refinery, which is under construction. However, since the single-point mooring and the oil depot at Paradip can be used to feed the Haldia and Barauni refineries, work on the pipeline has proceeded ahead of the Paradip refinery.