No its probably a 1.9 TDI 95 / 100 / 105 bhp and the pipe IIRC runs between the turbo (at the back of the engine as you look at it from to front) and the intercooler (in front of the driver's side wheel-arch).
Engine oil leaks in usually as a spray from the EGR valve assembly which feeds unburnt fuel and toxic fumes into the air inlet from the exhaust system (emissions legislation). If you look on one of the VW/Audi/Skoda/Seat forums you will get details on how to clean the intercooler and the pipes out, but in general, it is nothing to be too concerned about as long as the engine-oil level is OK. It won't do the catalytic converter any good, but on a diesel, the cat acts only as a very crude soot trap. Take them all off I say, be done with them.
If the car is petrol, ignore the above and get automotive assistance ASAP!