Oman Oil had planned to take a 26 per cent stake in the refinery styled Bharat Oman Refinery (BORL). The long wait has been exasperating for the company which has since been courted by the Ruias for a stake in Essar Oil's 10.5 million tonne facility in Vadinar, Gujarat. Sources say that Oman Oil has been far more receptive to the Essar proposal as the refinery is half-complete and will be operational by the end of next year. Essar Oil has also achieved financial closure for the project which has prompted other companies like Indian Oil Corporation (IOC) to consider equity participation here. The Centre has, however, told Oman Oil in "no uncertain terms" that it must not back out of BORL as it epitomises a sovereign agreement between India and the Sultanate of Oman. It has apparently said that Oman Oil is wellcome to invest in Essar Oil, so long as the Bina project is not given the cold shoulder.

BORL was one of the three joint sector refineries envisaged by the Centre way back in 1993, the other two being the west coast Refinery (a joint venture between Oman Oil and Hindustan Petroleum Corporation Ltd (HPCL), now shelved) and the east India refinery (an alliance between IOC and Kuwait Petroleum from which the latter has withdrawn).

"Oman Oil has already dropped out of the west coast refinery and IOC will implement the east India refinery on its own. The government does not wish to send the wrong signals to foreign investors and is keen that the original partner for BORL hangs on," ministry sources said.

This could be wishful thinking as the Bina refinery has encountered several hurdles, which have led to cost-overruns of nearly Rs 2,500 crore. At one point, Oman Oil felt that it made more sense to cap its investment frozen at $30 million instead of facing a renewed inflated figure. BPCL was asked to send an implementation schedule for the refinery along with details of its financing. Officials are hopeful that Oman Oil will send a positive response by mid-September but have, in the meantime, kicked off talks with the Oil and Natural Gas Corporation (ONGC) for a stake in the project.

ONGC's interest in BORL can be traced to the time when the project was conceived as a joint venture between BPCL and Oman Oil. The upstream major was keen on getting a foothold in the downstream sector but, tired of delays in the implementation of the refinery, decided to drop out. ONGC, entered into a strategic alliance with IOC to work together in key petro-related areas and was given the option to participate in the equity of the east India refinery. As this was not found to be a feasible idea, ONGC has again turned its attention to BORL where the bait lies in sharing marketing margins with BPCL. Teams from the two PSUs are working jointly on the proposal and the mood is far more buoyant than what it was a few years ago.

ONGC is tipped to pick up a stake of around 15 per cent which would be wellcome should Oman Oil decided against participating in BORL.