Indian Oil Corporation may expand its Haldia refinery in West Bengal to 7.4 million tonnes from 6 million tonnes, IOC chairman M S Ramachandran said on Monday.

The proposed expansion may take place after construction of a crude pipeline from east coast port of Paradip in Orissa, where IOC is building a new refinery, to its Haldia refinery and to the northeast.

"We are looking at the possibility of expanding the Haldia refinery after construction of the pipeline," he told reporters in New Delhi.

The Haldia port, with a draft of only 9 metres, cannot handle very large crude carriers, forcing IOC to import crude oil in smaller vessels and paying higher freight.

The 700-km pipeline would substantially reduce IOC's cost of crude transportation to Haldia refinery and the nearby Barauni refinery, Ramachandran said.

Haldia and Barauni refineries already have a connecting crude pipeline in place.

Construction of the Rs 1,200 crore (Rs 12 billion) pipeline is expected to begin early next year after obtaining the necessary environmental clearances, he said, adding the project would be completed in 36 months.

Ramachandran said IOC would recommence work on the nine million tonne Paradip refinery after Orissa government issues a notification restoring fiscal concessions for the project.

"We are targetting Paradip refinery completion by 2009-10," he said.