New Delhi: Indian Oil Corporation (IOC) has kicked off discussions for a $2 billion investment deal with Caliak of Turkey. IOC and Caliak, which signed an MoU late last year, had decided to explore possibilities of joint collaboration in the downstream space in Turkey.

The two are in discussions to float a joint venture which will develop a 10 million tonne grass root refinery project in Ceyhan, Turkey and establish a petro-retail business. A joint collaboration may also be explored for a pipeline project that will bring in the crude to the refinery. |Budget & your investments: View Infograph|

The Caliak Energi group is one of Turkey's leading industrial groups with interests in gas distribution, oil exploration, banking and textiles. It also has oil blocks in Turkmenistan. | Go to Sify Business Home page |

IOC and Caliak had bid for the Tupras refinery but were beaten by an aggressive bid by the Shell consortium. Turkey is the gateway to Europe and a presence in this market is expected to be of strategic importance to IOC's overseas plans. In addition, this also gives IOC access to Caspian crude.

IOC's expansion plans would necessarily have to look at both ends of the vertical chain, either on the upstream or downstream. Turkey's port of Ceyhan is an important outlet both for current Iraqi oil exports as well as for potential future Caspian oil exports. Turkey's Bosphorus Straits are a major shipping 'choke point' between the Black and Mediterranean Seas.

As per reports, Caliak Energi has proposed building a 700 km crude pipeline to transport oil from Samsun on the Black Sea to Ceyhan on the Mediterranean. It argues that this pipeline will divert from the Bosphorus oil reaching the Black Sea at Novorossisk. As per Caliak, this will not be a competitor to the $3 billion Baku-Tbilisi-Ceyhan project which carries oil from the Caspian.