Oil and Natural Gas Corporation chairman and managing director Bikash Chandra Bora said the elements of the synergy between the two companies would be worked out over the next two months. ``We have a meeting this month to start the ball rolling,'' he told The Financial Express.

The two companies have already begun identifying projects in which they could work together, rather than compete against each other. The so long independent, diversification into petrochemicals, for instance, is likely to become a joint venture of sorts.

``In future projects, whenever we think we will take a partner, we may give them the first right of refusal,'' the ONGC chief said. The tie-up between the national oil companies would tantamount to working together on common turf,without giving up territory, he suggested.

Bora for instance, ruled out possibilities of the oil exploration and production company venturing into oil refining at present and suggested that ONGC may have multiple partners in bidding for oil blocks being offered as part of the New Exploration and Licensing Policy. Indianoil, which has a memorandum of understanding (MOU) with the ONGC subsidiary, ONGC Videsh, for oil exploration overseas, has tied up with Premier Oil of the UK for its diversification upstream within the country.

Bora said the presence of ``members in each other's boards'' would automatically ensure a commonality of interests. He was quick to point out, though, that the joint commitment to synergise interests would not make a difference to the existing joint ventures.

Bora ruled out Indianoil joining ONGC to promote a 300 MW power plant at Hazira, for instance. ``We already have a memorandum of understanding (MOU) with the National Thermal Power Corporation (NTPC) for the project,'' hesaid, adding, ``we are not talking to IOC.''

The ONGC chairman pointed out that his company would join Indianoil in promoting a refinery-residue-based power plant at Panipat, however. The ONGC and Indianoil already have an MOU for jointly promoting the 300 MW gassification combined cycle power plant.

The power plant will be supplied fuel from Indianoil's recently commissioned refinery at Panipat, in Haryana. Indianoil has also ``shown interest in joining'' ONGC in putting up a paraxylene plant at Hazira.

The ONGC had so long been discussing a partnership with the Bharat Petroleum Corporation for the Rs 510 crore project to recover value-added products like paraxylene, ortho-xylene and benzene from the aromatic rich naphtha available at Hazira. The talks with BPCL have not made much progress, though.

In the meanwhile, ONGC has already submitted a pre-PIB (Public Investment Board) report on the project to the Union government. ``Indian Oil Corporation is also thinking of a paraxylene project inPanipat,'' said Bora, to point out the area of common interest.

He did not rule out the possibility of a partnership with Indianoil at its roughly Rs 4000 crore project for producing 3.5 lakh tonne of paraxylene and 5.25 lakh tonne of purified perepthalic acid (PTA). Indianoil is known to be negotiating with several prospective joint venture partners for the project, including the public sector Indian Petrochemicals Company Limited (IPCL).

The efforts on, to actually ``build a long-term relationship'' belies market assumptions that the share swap was merely a pre-Budget exercise to raise revenue for the government. The ONGC will buy 10 per cent government equity in Indianoil, estimated to cost nearly Rs 1700 crore. Indianoil will reciprocate by picking up 10 per cent government stake in ONGC estimated to be worth Rs 3,000 crore. The boards of the two companies have worked out a formula for pricing the stock and are awaiting a clarification from the Centre on whether they are expected to pick up 10 percent of the existing equity capital or 10 per cent of the government stake.