The two giant refineries at Jamnagar in Gujarat will produce nearly 20 million tonne of petroleum products by the year 2000, two years before marketing rights are scheduled to be freed. The two refineries have been negotiating a marketing arrangement with IOC.

IOC chairman M. A. Pathan told newspersons on Tuesday that the talks were still on. The private sector refineries are pushing for a take-or-pay arrangement, but the national oil company is yet to decide on the quantum of products it wants to lift. ``We are working out the numbers,'' Pathan said, pointing out that Indianoil could not provide the take-or-pay guarantee till it had assessed its own marketing strength. ``Our refineries have a combined throughput of 62 million tonne,'' the IOC chief said, adding that the commissioning of thesix-million-tonne-capacity Panipat refinery would augment the company's output of marketable products to 68 million tonne.

``We will not take less than 50 per cent of the output of Essar Oil and Reliance Petroleum,'' Pathan said. The rest of the products from the Essar and Reliance refineries will have to be marketed by other national oil companies, like Hindustan Petroleum Corporation and Bharat Petroleum Corporation.

Essar Oil is expected to begin producing a little less than 12 million tonne of petroleum products next year and Reliance Petroleum will follow suit with a refinery throughput of nine million tonne in the first phase. Reliance will subsequently upgrade the capacity of the Jamnagar refinery to 18 million tonne, but by then it will have acquired rights to market its own products. Indianoil, which now caters to nearly half the petroleum products market at home, also markets the output of Madras Refineries Limited, Cochin Refineries Limited and Bongaigaon Refineries and Petrochemicals Limited.The company is stretching its retail network to accommodate the output of its own new refineries and the growing market for petroleum products which is expected to go up to 95 million tonne this year, from 85 million tonne last year.

Speaking informally after the ceremonial conclusion of the third management course of the Indian Institute of Petroleum on Tuesday, Pathan said IOC proposed to go upstream once the New Exploration and Licensing Policy was put into effect. The company already has a memorandum of understanding with ONGC Videsh for scouting for equity oil abroad.

It is now firming up agreements with transnational giants like Mobil and Petronas for exploring oil blocks within the subcontinent. The Indian Institute of Petroleum, a dedicated academic centre of Indianoil, has already devised training courses on the new areas of business that the Rs 59,000 crore-turnover oil giant plans to diversify into.

The new business areas are exploration and production, power generation and petrochemicals,all of which are related businesses. ``We want to stay within our area of core competence,'' Pathan said. Indianoil plans to generate roughly 1750 mw of power from refinery residue in the coming years. All the power projects will be joint ventures with independent power producers.

At the site of Indianoil's Panipat refinery for instance, the company will generate 310 mw refinery-residue based power in collaboration with Marubeni of Japan. Similar power projects are on the anvil at Haldia in West Bengal, Bhatinda in Punjab, Savli in Gujarat and Kosi Kalan in Uttar Pradesh.

Pathan said the diversification into petrochemicals would essentially involve ``value addition to refinery products.'' In the first phase the oil giant intends to venture into producing synthetic yarn.