CHENNAI, Dec 20: Mobil Peevees Company Ltd, a joint venture between the oil major Mobil and a Kerala-based NRI group Peevees Ltd, is considering setting up a bottling facility for its LPG venture in Chennai and has identified two possible sites for this purpose.

Mobile Peevees managing director John P Parry told The Financial Express that the company is weighing the probability as against acquiring existing plants which are non-operational.

He said Mobil was negotiating with owners of two bottling plants to take over their facilities. Declining to name the companies they are speaking with, Parry said the negotiations are in the final stage.

He said the plants have a capacity for handling around 10,000 tonnes a year and will cost the company somewhere around $500,000. The company had finalised a deal to take over a bottling plant in Salem.

Setting up bottling facilities is part of the distribution network the company is putting in place for its foray into the parallel LPG market in the middle of next year.

Mobil has planned to launch its services in the southern market.As far as the northern market is concerned, Mobil is mulling over the possibility of setting up an entirely different company to take up the distribution. The consideration is based on the tie-up Mobil has with the Indian Oil Corporation (IOC) and Mobil is exploring the logistics of setting up a company as a joint venture to cater to the LPG market in the north. He, however, said the considerations are at a preliminary stage and have to be worked out carefully before anything concrete was finalised.

The company plans to have its supply, bottling and warehousing tied up by the first quarter next year as LPG distribution is scheduled to take off in mid-1998. It has earmarked around $5 million for setting up the distribution network.

Parry said Mobil will offer its consumers a "value-added package" which would include safety and quick service.

He refused to spell out a figure when asked about pricing, but said it will be less than what the parallel market had on offer now.

The company is targeting the whole spectrum of LPG users - industrial, commercial and individual. Initially, the market will be confined to the cities and once the network was firmly established the company will go to the rural market, said Parry.

Mobil will source the LPG from the Middle East and Singapore and the company has a storage facility planned at the Beypore port which the company is in the process of developing.

Apart from LPG, Mobil also has plans to enter into marketing of other petroleum-based products and is currently studying the market for kerosene.

Another proposal under active consideration is the use of LPG for automotive fuel. This proposal is currently under review with the government and once a policy statement is made Mobil will make a concrete plan for this segment, he said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.