For all practical purposes, Kuwait Petroleum Corporation has opted out of the project though no formal communication has been made on this decision. The IOC board, in the meantime, has decided to go it alone for the project and has sought approval from the ministry of petroleum and natural gas.``KPC has been dilly-dallying for months now and IOCis categoric that it has the financial muscle to commission the project on its own,'' top sources said. The board has already cleared an initial investment of Rs 750 crore for the refinery.

At one point, KPC had indicated that it would bring in another partner for the project to which IOC said that it could exercise a similar option. The Fortune 500 company had also offered KPC the right to market the products of the refinery wholly or partially through a new joint venture company but even this did not help expedite matters.

ONGC has been seeking a stake in a refinery for a while now and was initially keen on taking 15 per cent equity in the six million tonne Bina refinery promoted by Bharat Petroleum Corporation and Oman Oil Company. However, it has now entered into a strategic alliance with IOC to work in key petro-related activities and has consequently dropped the move to acquire a stake in the Bina project.

The east coast refinery located in Paradip, Orissa, is scheduled to go on stream in 2002.While the crude will be received at the port, the products of the refinery will be transported by a pipeline being commissioned by Petronet from Paradip to Allahabad via Rourkela and Ranchi. The capacity of the refinery will be enhanced to 12 million tonnes at a later date.

The ministry of petroleum and natural gas was not too enthusiastic about ONGC's participation in the project as it believed the PSU needed to give top priority to its key strengths of exploration and production (E&P). This was particularly vital at a time when world prices of crude were on the rise and the pressure on ONGC would be enormous to increase production locally.

However, the company has apparently convinced the ministry that it has enough funds for its E&P activities and still allocate a reasonable amount for the Paradip project. ``The figure of Rs 600 crore is sufficient for the moment and ONGC intends to make this an educative experience in the downstream sector,'' sources said.

Petronas may replace KPC asco-promoter

The latest reports doing the rounds is that Petronas of Malaysia could replace KPC as co-promoter in the east coast project. Both IOC and Petronas have been working closely on important projects like parallel marketing of liquefied petroleum gas, exploration and production etc. It is only natural, experts say, that refining becomes the next option and the chances of Petronas taking up a 26 per cent stake in the Paradip project are ``very bright.''