New Delhi: ONGC Videsh Ltd (OVL), the overseas arm of State-run Oil and Natural Gas Corp, today (Jun 24, 2004) got clearance for investing $ 200 million in laying an oil pipeline in Sudan, an expenditure for which energy-deficit India will be paid back in crude oil.

The Cabinet Committee on Economic Affairs, chaired by Prime Minister Manmohan Singh, cleared the signing of the pact with Khartoum, which had given the contract for laying the 741-km long petroleum product pipeline and a refinery revamp to India on nomination basis, Petroleum Minister Mani Shankar Aiyar told reporters after the meeting.

"It marks a significant breakthrough in economic relations with Sudan," he said.

Sources said that OVL will hold 67 per cent stake in the pipeline project while the remaining would be shared between Indian Oil Corp (IOC) and Oil India Ltd (OIL).

The 12-inch pipeline will evacuate gas oil and gasoline from the 50,000 barrels per day Khartoum refinery to Port Sudan. Pipeline throughput is expected to be 826,000 tons per year (about 18,330 barrels per day) in Phase I and 2.54 million tons per year in Phase II.

The capacity of Khartoum refinery, equally owned by the Sudanese Government and China National Petroleum Corp, is currently being expanded to 90,000 barrels per day.

The pipeline is expected to be ready for operations in 14 months, they said, adding ONGC has awarded the contract for laying the line to Mumbai-based construction firm Dodsal.