The two signed a letter of intent on October 13 to form a 50:50 venture to construct, operate and control the Bhatinda refinery to start with, and later cover the entire refining and marketing sectors.
"HPCL and BP have agreed that within one month from the date of this Letter of Intent, both parties will pursue establishment of the joint venture vehicle and the broader strategic partnership with each other with a view to reaching a binding agreement," a government official said.
It was agreed that such binding commitment would be reached following a further review and agreement upon the management and governance structure of the joint venture. The official said BP would assist HPCL in crude selection and supply for other refineries of HPCL.
The joint venture plans to market Bhatinda refinery products and it would get access to HPCL's existing infrastructure on mutually agreed terms.
The joint marketing activities would be subject to BP making an investment exceeding Rs 2,000 crore (Rs 20 billion) in the refinery project, the official said.
The LoI provided for a broader strategic partnership for participation in greenfield refinery and/or a terminal project on east coast India; providing opportunities to HPCL to acquire refining and marketing assets that BP may identify from its overseas portfolio.