SBI Caps, it may be recalled, was hired by BPCL to do a complete valuation of the Essar refinery being commissioned in Vadinar two years down the line. The Ruias, in turn, asked PricewaterHouseCoopers to do an independent appraisal of their project. Later, SBI Caps roped in Engineers India to help out in the valuation exercise.

"IOC will take into consideration important parameters like the cost of the project and the need to go in for further refining capacity in Gujarat. The company is already planning to increase capacity of its Koyali refinery to 18 million tonnes and will have to decide if it makes sense to acquire another 12 million tonnes of Essar Oil," top sources said.The other point to be considered is that IOC already has a marketing agreement with Reliance Petroleum (RPL) to lift half the products from its 27 million tonne refinery in Jamnagar. A separate joint venture company will be formed after 2002 when the oil sector is completely deregulated. It is in this context that IOC will need to carefully consider if it needs to participate in the equity of Essar Oil.

The Ruias had first approached BPCL to be a strategic partner for the refinery following which feelers were sent to Oman Oil Company. It was after this that IOC entered the picture though experts say that the PSU will stand to gain little from taking a stake in the refinery. Oman Oil has indicated that it will first need to take a 26 per cent stake in the tankages of Essar Shipping which will be hived off into a new company. This is a crucial part of its plan to participate in the equity of Essar Oil.

If everything goes according to plan, Oman will invest around $200 million in the refinery andconsequently the stake of the Ruias will be down from 57 per cent to 40 per cent. Sources say that even after this, there will be scope for BPCL or IOC to come in as third partner with a 26 per cent stake. Thus far, the news going around in industry circles is that BPCL is not too inclined towards investing in Essar Oil though this could not be confirmed from company officials. The fact that the Prime Minister's Office is working overtime to hasten commissioning of the six million tonne Bina refinery could also result in changed priorities for BPCL.