If everything goes according to plan, Oman will invest around $200 million in the refinery and consequently 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 Bharat Petroleum Corporation to come in as a 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. "The navratna will give priority to the Bina project which has beenhanging fire for over four years now. The cost overruns have been close to Rs 2,000 crore and BPCL will not abandon this refinery," sources said. Incidentally, Oman Oil is the co-promoter of the project and it remains to be seen if the company will keep its options open for both Essar Oil and Bina.

Essar Oil, it may be recalled, is considering a demerger of its exploration & production (E&P) business as part of a major restructuring drive. PricewaterhouseCoopers is working on the feasibility plan which will involve equity participation by an oil company from either here or abroad. Similarly, NM Raiji & Co, the Mumbai-based chartered accountants, are working on a proposal which will involve the demerger of Essar Shipping's terminals and tankages. This is the division in which Oman is looking for a 26 per cent stake.

Some top multinational oil companies have already begun talks on the possibilities of acquiring a stake in the E&P business (which would not include the drilling operations overseas planned tobe another new entity) where again the Ruias are expected to be partners in the new company. The entire demerger plan is expected to be ready in the next few weeks, sources say.

The company which eventually takes a stake in Essar Oil, be it BPCL or Oman Oil, would also be a stakeholder in the Rs 400-crore Vadinar-Kandla pipeline being commissioned towards the end of this year. Essar Oil, along with Reliance Petroleum, holds 13 per cent equity in the project, where Petronet India and the Indian Oil Corporation account for 26 per cent each. The pipeline will transport the products from the refineries of Essar and Reliance from Vadinar to Kandla from where they will be carried in IOC's Kandla-Bhatinda pipeline.

Similarly, the new stakeholder in Essar Oil will also have a presence in the Rs 4,400-crore Central India pipeline. The project was initially the brainchild of Reliance Petroleum and is expected to be operational four years from now if everything goes according to plan. It will carry the products fromJamnagar to Gwalior via Koyali where it will pick up the products from IOC's 12.5-million-tonne refinery.

Essar Oil's 80mw captive power plant, Vadinar Power Company, expected to be commissioned around the same time of the refinery, will be leased out by Marathon of the US to the new stakeholders. Sources have reiterated that this arrangement will be finalised shortly and that there is no way the acquirer (or new partner) of Essar Oil will take over the Vadinar Power Company.

BPCL has made it clear that it is not interested in acquiring Essar Oil's upstream operations. This is being perceived by observers as being the major reason for demerging the business and forming a separate entity.