The board of Indian Oil Corporation has approved the draft MoU for a proposal by the Nigerian state of Edo for for setting up a new refinery. This would be IOC's first refinery on foreign soil.

The refinery will come up in joint venture with the Edo government. The capacity of the refinery and the project outlay would be decided after an IOC team visits Edo shortly.

The refinery project, it is learnt, will be executed subject to certain conditions put forth by IOC such as equity in a Nigerian oilfield, discount on crude oil supplies and permission to enter the retail trade of petroleum products in that country.

Oil equity in a Nigerian oilfield will ensure steady crude supplies not only to the Nigerian refinery but would also offset any irregularities in oil supplies to IOC's domestic refineries.

IOC imports both Escravos and Forcados grades of sweet crude produced by Shell International and ChevronTexaco from the oilfields in Edo.

The new refinery is proposed to feed Edo, one of Nigeria 's largest oil consuming states. IOC has also bid for revamping the refineries in Nigeria and talks are on.

Nigeria is the world's fifth largest oil producer producing 2.6 million barrels per day that can technically sustain refining capacity of 130 million tonnes per annum. As against this, Nigeria's four refineries, operating at poor capacity due to obsolescence, barely produce 22.5 million tonnes per annum of petroleum products.