The company is also exploring the option of taking a stake in one of the three stand-alone refining companies - Madras Refineries (MRL), Cochin Refineries (CRL) or Mangalore Refinery and Petrochemicals (MRPL). "Talks are at an advanced stage with MRPL and a decision is likely within the next two months," sources said.

According to them, the move to bid for a stake in one of the oil PSUs will largely depend on Government policy in this matter. At present, the Sengupta Committee proposals under review have outlined sale of the Centre's stake in CRL and MRL to BPCL and IOC. Reports suggest that the finance ministry is keen on an open bidding process and if this happens, Total will make a pitch for one of these oil PSUs.

The French oil major would be more inclined to pickstake in either BPCL or HPCL as this will give access to an enormous retail network of over 4,000 product outlets. On the other hand, participating in the equity of a stand-alone refiner would mean building a marketing infrastructure, a time consuming and expensive process.

Total is categoric that it is in the retail oil business where the real money lies and not an investment in refining alone. The first effort in this direction was the proposal made by the Shell-Saudi Aramco combine which outlined a marketing venture with 50 per cent equity held by an oil PSU and the balance by the duo. The PSU concerned - BPCL, HPCL or IOC - would transfer all its product outlets to the new venture as its 50 per cent equity contribution.

The oil companies protested vehemently to this plan and the petroleum ministry put it in cold storage. Experts say that things could be different now what with deregulation of the oil sector set to take place three years down the line and the need for greater consolidation in themarket.

The options before the government are either to protect the PSUs in a free environment or allow them to be taken over by stronger multinational oil companies. Even in the Indian context, Reliance Petroleum has already indicated that it is open to the idea of taking over the retail outlets of BPCL, HPCL and IBP. The company will require a marketing network of this magnitude to supply products from its 27-million-tonne refinery in Jamnagar.

The Government is believed to be of the view that it makes little sense to have a cluster of oil companies when mergers, alliances and takeovers make greater sense. For instance, there is no point continuing with the concept of stand-alone refining companies which, logically, should be in the hands of stronger marketing allies. This would be equally applicable in the case of sole marketeers like IBP which need refining support to keep their business going.

In the event of an open bidding process for CRL and MRL, Total's strategy would be to get a foothold inone of these companies first and then wait for an opportune moment to take a stake in either BPCL or HPCL. "This is on the assumption that the Government decides to privatise one of these PSUs at a later stage," sources said.