The country's largest refiner Indian Oil Corporation is mulling setting up a wholly-owned overseas investment vehicle if the government rejected the plan to create a second incarnation of ONGC Videsh Ltd with the participation of all state-owned oil firms.

"We are keen on diversifying into oil exploration and production by acquiring oil fields abroad. We cannot for ever be dependant purely on imports for crude oil," senior company officials said in New Delhi.

IOC along with state-owned majors Hindustan Petroleum Corporation Ltd, Gail India Ltd and Oil India Ltd has petitioned the government for being allowed to set up a new joint venture company to pursue exploration and production project overseas.

Tentatively named OVL-II, the joint venture would be the combined overseas arm of the four state majors, with the original OVL running the show and holding a controlling stake.

It is proposed to have the same empowerment and fast-track project approval as presently enjoyed by OVL, the overseas arm of Oil and Natural Gas Corporation.

"If they (petroleum ministry) do not give permission for OVL-II, then we plan to go ahead with our own IOC Videsh," sources said.

The four majors were initially demanding equity stakes in OVL itself and thereby in all of its overseas E&P projects, including Sakhalin-1 in Russia and the Greater Nile Petroleum Operating Company in Sudan.

The government, however, last week rejected this demand, suggesting instead that they could join hands with OVL in all future overseas projects under a new joint collaborative "arrangement".
             
Sources said the four companies were not enthusiastic about the new "arrangement" and wanted a formal entity to be created.