Oil and Natural Gas Corporation is considering the option of setting up a joint venture or a wholly owned subsidiary for its petroleum retailing foray.

The corporation's chairman Subir Raha said that, while the retail business will be launched under the 'ONGC' brand and other sub-brands, the structure of the vehicle has not been formulated as yet.

"There are three options before us. We either undertake the new business through the principal company ONGC. Otherwise, we may set up a public sector joint venture or a new wholly owned subsidiary," he said.

Raha clarified that MRPL on its own cannot act as a vehicle since it does not have a licence to retail petroleum products from the government.

On the other hand, ONGC has a licence from the government to set up 1,100 retail stations in Kerala, Karnataka, Tamil Nadu, Andhra Pradesh, Maharastra and Gujarat.

The first fuel station is expected to be operational by the end of the year. Raha said the remaining stations will be set up across the designated area in three-five years.

The need for a setting up a separate company to undertake the retail business may have cropped up from the fact that ONGC will source its petroleum products from its newly acquired refinery -- MRPL -- and there is a possibility of cross-subsidisation.

Raha did not comment on this but said plans were in place, and the roll-out would happen as originally proposed.

ONGC has planned an investment of around Rs 600 crore (Rs 6 billion) for its petro retail foray, part of which will be made this year. Overall investment outlay for the year is Rs 10,000 crore (Rs 100 billion).

Raha also said that though the merger of MRPL with ONGC was under consideration, the immediate priority was to unlock Hindustan Petroleum Corporation's shareholding from MRPL.

"When we acquired the stake in MRPL, HPCL was a public sector undertaking and, hence, its shareholding is part of the government's equity. However, with moves being made to divest government shareholding in HPCL to a strategic private partner, its shareholding stands scrutiny as far as ONGC's interests in MRPL is concerned.