Indian Government has approved Cairn India's proposal to lay a pipeline from Barmer to Salaya in Gujarat for transporting crude from its Rajasthan fields. The company would recover the cost of laying the pipeline from the profits it earns from the sale of oil from the field. The Rajasthan government had earlier opposed the shifting of the delivery point to Gujarat saying it would result in loss of tax revenue.

The decision had been pending for some months and Cairn India announced recently that it would push ahead with the project even if it did not get the approval, fearing it would miss its target to produce oil from Rajasthan in the second half of 2009.

The company, along with ONGC, the 30 per cent partner in the field, has invested over $1 billion in Rajasthan, and plans to invest an additional $2.6 billion in the development over the next two years.

The project, which will have capacity of 175,000 barrels a day, is seen as crucial for India, which imports more than 70 per cent of its oil needs. The project is expected to create 10,000 jobs in Barmer during the construction phase.