ONGC has decided that it will pick up a stake in only one of the projects, based on the findings of the team. The report will be submitted in the next few weeks and will pave the way for the upstream major's debut in refining. Indian Oil Corporation's Paradip project is not on ONGC's agenda as no formal offer has been made yet.

Sources said that ONGC's choice would be largely decided by the cost estimates of each project. The Punjab refinery is expected to have an overall outlay of around Rs 16,000 crore, inclusive of the 9-million-tonne facility; a crude pipeline from Vadinar, Gujarat, to Bhatinda; a 500mw power plant and a product pipeline from Bhatinda to Udhampur.

The Bina refinery, promoted by Bharat Petroleum andthe Oman Oil Company, has projected costs of about Rs 7,500 crore. This will factor in the 6-million-tonne refinery; crude-import facilities through a single-point mooring; a crude-oil storage terminal at Vadinar; a cross-country crude pipeline from Vadinar to Bina and other infrastructure facilities at the refinery.

While the promoters of the Bina project have given their approval for ONGC's entry, Hindustan Petroleum is believed to have agreed to the proposal of offering the corporation a 26 per cent stake in the Punjab project. However, with Exxon Corporation of the US now rumoured to be close to signing a memorandum of understanding with Hindustan petroleum, it is not clear what ONGC's roll will be.

The Punjab refinery was initially conceived as a 26:26 venture between Saudi Aramco and Hindustan Petroleum. The former withdrew and instead decided to team up with Shell for a 25:25 downstream venture with the rest proposed to be offered to a public-sector unit. When it was not clear which foreign companywould fit in as an alternative partner to HPCL, the government is believed to have asked ONGC to step in if required as a co-promoter with a 26 per cent stake.

"However, with Exxon now entering the picture, it remains to be seen if ONGC would still be needed as a third partner. In any case, the American company's consent would be required before such a move is even thought of," sources said. For the time being, there has been no indication from either HPCL or Exxon if ONGC can also team up as their priority is to sign the memorandum of understanding as 26:26 partners.

Incidentally, both BPCL and the Oman Oil Company are said to be open to the idea of ONGC taking a 26 per cent share in the Bina project. However, sources said that ONGC would have to think twice about this for a host of reasons. The corporation has recast its exploration plans and the financial figures are being worked out. The quantum of funds for its overseas operations need to be earmarked as also for its entry into power with theNational Thermal Power Corporation. The two are planning to set up a 300mw power plant in Gujarat which would involve at least Rs 300 crore.

Taking these factors into consideration, sources say that ONGC will, for a start, confine its stake to around 20 per cent in its initial refinery, be it Punjab or Bina. Later, it would consider getting into the field in a bigger way once it hones its skills in marketing.

At one point, BPCL was believed to be keen on offering ONGC a 26 per cent stake in its Uttar Pradesh project too, where Shell was the initial choice. However, recent reports have indicated that this refinery will be commissioned only after the Ninth Plan, which ends in 2002.