Oil & Natural Gas Corporation (ONGC) has planned to acquire 26 per cent stake in Bharat Petroleum Corporation's upcoming 6 million tpa refinery at Bina in Madhya Pradesh.

According to ONGC Chairman, Mr Subir Raha, the company has reached an understanding with BPCL for the Bina refinery and other associated facilities. It is also understood that BPCL will help ONGC in setting up retail outlets.

It may be recalled that Oman Oil Company (OOC) was supposed to be the initial equity partner in the venture, but later backed out. OOC's equity holding now stands at a mere 2 per cent.

The refinery costing around Rs.6,000 crore is expected to be commissioned by end-2006.

ONGC's decision of seeking equity participation in the Bina refinery project is the second major step in establishing a firm presence in the petroleum refining sector. In 2002, ONGC acquired the Aditya Birla group's 37 per cent stake in the Mangalore Refinery & Petrochemicals Ltd. HPCL is the other equity partner in MRPL.

Interestingly, it was only in late 2003 that ONGC decided against participation in HPCL's 9 million tpa Bhatinda refinery coming up at Punjab, on grounds that the refinery might be a superfluous venture given India's self-sufficiency in petroleum refining capacity.

Both the Bina and the Bhatinda refinery projects faced early trouble with foreign participants exiting the projects. In both the cases, the government permitted the Indian promoters -- BPCL and HPCL, respectively -- to go ahead solo.