The partners are expected to thrash out issues relating to marketing products of the refinery during the next few weeks. There is every likelihood of ONGC sharing IOC's own infrastructure, which, at present, comprises over 7,000 retail outlets and other installations like depots and terminals. ONGC has always made it clear that its interests in refining would be preceded by ready access to marketing where the real money lies.

Kuwait Petroleum Corporation (KPC) is also tipped to be a partner in the project with a 26 per cent stake. Though ONGC is yet to take a decision on its own equity share, sources say the navratna will keep it confined to20 per cent. In any case, IOC, which will account for 26 per cent, will only offer ONGC up to 24 per cent to ensure that the venture remains a non-Government company.

ONGC has also agreed to team up with IOC in the 301mw power project being commissioned in Panipat. While IOC and Marubeni of Japan will hold 26 per cent each in the plan, the ONGC board has given the go-ahead for a 20 per cent stake. Plans are now afoot for a similar stake in IOC's 500mw power project in Sawli, Gujarat.

No decision has, incidentally, been made on the Nagapattinam refinery (in Tamil Nadu) being planned by IOC where ONGC has been invited to participate as partner. Current indications are that the upstream major is not too enthusiastic about the idea as both Madras Refineries and Cochin Refineries are expanding capacities which could result in surplus capacity in the region. The Nagapattinam project is only scheduled to go onstream after the ninth plan ending 2002.

Sources say that ONGC would, similarly, be reluctant to goahead with its plans for a nominal stake in the Bina refinery being promoted by Bharat Petroleum Corporation and the Oman Oil Company. "For the time being, ONGC is better off being conservative on its investments as it also has the added responsibility of ensuring crude supplies in India," they add.

The IOC board has already okayed an initial investment of up to Rs 750 crore for the east coast refinery. The Fortune 500 company is categoric that the project will go ahead despite the fact that KPC is yet to give its formal approval as partner. Talks have been held between the two companies for several months but no concrete decision has been reached yet.

Sources said that the IOC top brass is of the opinion that it makes little sense to wait until KPC makes up its mind to participate in the project. Costs would just mount and it is therefore better to get cracking, they add. The process of land acquisition at Paradip has begun and IOC is hopeful of commissioning the refinery by 2002.

Recent developmentsindicate that IOC and KPC have also been exploring the option of roping in additional equity holders for the project. This move is believed to be a result of KPC telling its Indian partner of its intention to bring in another partner. To this, IOC has said that it would also be free to exercise a similar option and ONGC has, hence, been invited to pick a stake.

The two PSUs have decided to work in a range of petro-related activities both here and abroad. They have also strengthened their relationship by recently entering into a 10 per cent crossholding arrangement.

The east coast refinery was among the three joint-sector projects envisaged by the Government at that time, the other two being the west coast refinery (a joint venture of Hindustan Petroleum Corporation and the Oman Oil Company, now shelved) and the central India refinery co-promoted by BPCL and Oman Oil.