"We will buy 52 per cent of the products offered to us by these refineries. At the same time we are forming separate joint venture companies (JV) with each of them for remaining 48 per cent products," Pathan told reporters on Wednesday.

Refuting criticism, Pathan said "the agreements were signed purely on commercial grounds and as a strategic move. There was no (no) political pressure."

IOC board has recently approved purchase of 52 per cent of five petroleum products -- petrol, kerosene, diesel, LPG and aviation turbine fuel -- which are currently under administrative price mechanism (APM) from the two refiners at the import parity price.

Pathan said that IOC would also evaluate prospects for other heavy distillates like naphtha, sulphur and furnace oil through these JVs.

Inits marketing agreement, IOC has also stipulated a condition that neither Reliance nor Essar would add fresh capacity to what they had offered for the next five years and this period would be utilised by the national oil company to augment its own supply position, Pathan said.

Giving details, IOC's director in-charge of business development corporate communication Subir Raha said Reliance Petrochemcials Ltd had offered 16 million tonnes of product while Essar oil company another 10 million tonnes, of which IOC had agreed to market 52 per cent.

The agreement is on take or pay basis with identical penalty clauses for either side in case of default in lifting or supply of petroleum products and the Rs 700 per tonne penalty would be computed on an annualised basis, he said.

The Reliance is setting up a 27 million tonne refinery project in Gujarat and is utilising IOC network to market its output after taking into account groups' requirements for various power and petrochemical plants.

Asked for theconditionality against imports of the products offered by these refineries, Pathan said "we would certainly prefer sourcing our products from the domestic refinery and IOC would not be at a disadvantage if the deal was on import parity prices."

"There is also a conditionality that as long as Reliance and Essar meets the requirement of IOC, the corporation should not resort to imports," Raha said adding that it could take more based on its requirements.

Our refining capacity as of today is 27 million tonnes per annum and the corporation is selling 40 million tonnes.