Saudi Aramco joins TotalFinaElf of France and Kuwait Petroleum Corporation (KPC) who are examining the option of becoming a strategic partner for MRPL. Sources say that there are two other oil majors who could throw their hats into the ring, one of which is tipped to be the National Iranian Oil Company (NIOC).

Saudi Aramco, it may be recalled, was HPCL's original partner for the nine million tonne Bhatinda refinery scheduled to be commissioned during 2006-07. The company, like other oil multinationals, was of the opinion that it made little sense to invest in refining when marketing products was distinctly the more profitable option.

Along with the Netherlands-based Shell, Aramco presented a proposal to the ministry of petroleum and natural gas which envisaged that one of the three oil PSUs - IOC, HPCL and BPCL - hive off their retail outlets to a new company. These assets would be valued and corresponding equity to the extent of 50 per cent would be brought in by Shell and Aramco. The balance equity would be held by the PSU concerned. The petroleum ministry shot down the proposal following stiff opposition from the oil companies. The Centre then made it clear that any company keen on entering direct marketing would have to first invest Rs 2,000 crore in refining and other infrastructure.

More than four years after Aramco withdrew from its plans for India, MRPL has emerged as the best option to enter the retail segment for petro-products.On hand is a ready-made refinery which desperately needs a strategic partner who will extend financial support and assist in its plans for direct marketing.

MRPL had roped in Andersen Consulting to examine the prospects of entering the retail trade, a function that is presently being done by co-promoter, HPCL. Andersen is categoric that the company should go ahead though further details on the international consultant's recommendations could not be obtained. Sources, however, say that the company's plan for direct marketing will hinge on come crucial issues. One is the timely induction of the strategic partner who will give MRPL the financial help and advice to chalk out a retail plan in India.

TotalFinaElf has been eyeing the Indian petro-product marketing arena for a while now and present indications are that MRPL may not be a bad bet. To KPC, this will translate into an avenue to supply its crude apart from the fact that there is plenty to gain in the retail trade also.

The cash-strapped MRPL will benefit from having one of these companies as strategic partner as it will be able to hold its own in a fiercely competitive free market.

The plan for direct marketing could dovetail with the Mangalore-Bangalore pipeline scheduled to be commissioned in November 2002. HPCL is the lead company of the Rs 650 crore project which will evacuate products from MRPL's nine million tonne refinery. This is a strategic network which has caught the fancy of other investors like RPL, IOC and Oil India.

It is but obvious that there is no way MRPL can hope to replicate a retail product chain on the lines of HPCL which has over 4,000 outlets all over the country. The company, however, hopes to make a small beginning in the south and observers believe this could be in the consumption zones of Karnataka and Andhra Pradesh.

MRPL has been going through hard times because of wafer-thin refining margins and a skewed import duty structure on crude and products. The only way it can set right the balance is to go in for direct marketing of products by the time APM is completely dismantled in April 2002 or even earlier should the ministry decide that this is a better option.