The state-owned Indian Oil Corporation is looking at a market in Pakistan for its petroleum products, especially middle distillates such as diesel and kerosene.

The oil refining and marketing major said it would soon initiate a dialogue with national oil companies in Pakistan for selling as much as two million tonnes of petroleum products per year.

"The political climate should allow us to export," P Sugavanam, director (finance), Indian Oil, told Business Standard, pointing out that steps had been taken in this direction, though no talks had been held so far.

Indian Oil wants to tap potential markets in Pakistan's North-West Frontier Province. It has two large refineries at Mathura and Panipat, which are close to the area. Since these markets in Pakistan source petroleum products from Karachi, or import them, the corporation sees a great opportunity for profitable business there.

Sugavanam said the corporation was planning to initiate a dialogue soon with national oil companies in Pakistan for direct trade. "We had talked to them prior to the Kargil War and had almost entered into a deal. But the talks fell through as the political atmosphere deteriorated." he said.

He said there was consensus among the parties that direct trade relations should be preferred over routing of products through West Asia. "If direct trade can take place in the case of sugar, why not for petroleum products. The government had given us a go-ahead long time ago. We should do it since it is commercially viable. However, we will have to weigh the political atmosphere at the time of striking the deal," said Sugavanam.

Pakistan meets its requirement of petroleum products through a mix of domestic production and imports. The marketing set-up comprises state-owned as well as private players.

Sugavanam said IOC could notch up a market of close to two million tonnes, which is a bulk of Pakistan's imports, "provided we have the excess capacity."

"It will definitely be a profitable business. Not only do we have refineries close to the market, our products are also better than what is available in Pakistan," he added.