The Luxembourg-based firm will invest Rs 3,200 crore ($710 million) for 49 per cent equity in HPCL’s nine-million-tonne refinery, which saw multinationals Exxon, Saudi Aramco, Total and BP engage in talks, later withdrawing, since the joint venture project was approved in 1998.

“A joint venture agreement has been approved by the HPCL Board with Mittal Investment for Punjab Refinery project in which both will have 49 per cent equity and the balance 2 per cent will be allocated to financial institutions,” said an HPCL note.

The two companies will sign the joint venture agreement within a fortnight, HPCL chairman M B Lal said. The refinery will take 48 months to build and is likely to be commissioned by end-2010.

Lal said that state-run exploration firm Oil India may join the project at a later date and may get 10-15 per cent out of HPCL’s share. OIL is currently doing the due diligence of the project.

“HPCL will sell the (refinery’s) products to meet the demand in domestic northern markets. This investment will also give Mittal a right to enter the Indian oil marketing sector. They can open their own outlets,” Lal said.

Deora said HPCL and the Mittal investment arm were also jointly exploring overseas refining and marketing opportunities, and may bid for foreign oil and gas assets.

FDI in refineries promoted by public sector undertakings was raised to 49 per cent after the 1997 norm of 26 per cent failed to attract investments.

In private refineries, FDI up to 100 per cent is allowed through automatic route. Last year, Chevron bought 5 per cent stake for $300 million in Reliance Petroleum’s planned 27 million-tonne export-oriented refinery in Jamnagar.

Mittals have also formed a 50:50 joint venture with HPCL to bid for 51 per cent stake in the 9 million tonnes Port Harcourt refinery in Nigeria, where the government has invited expression of interest for a strategic partner.