Indian Oil Corp Ltd is giving priority to upstream exploration and production projects and is looking to the Middle East and Africa to expand its oil and gas asset portfolio, chairman M S Ramachandran said on Sunday.

He said IOC was assessing five to six blocks offered in India's latest oil licensing round and was in talks with prospective partners.

"IOC is slowly gearing up to go upstream. Oil companies should invest more in the upstream sector, priority will be given to these projects," Ramachandran told Reuters on the eve of the Asia Oil & Gas Conference in Kuala Lumpur.

"For downstream, the demand is tapering out, further investment will be somewhat lower compared to investments in upstream."

IOC has minority stakes in 12 blocks in India and two coalbed methane blocks.

He said IOC would work closely with the country's biggest exploration company, Oil and Natural Gas Corp, to find overseas assets and compete with Chinese oil firms and Malaysia's Petronas.

Asia imports about two-thirds of its oil needs, with about 80 percent of imports coming from the volatile

Middle East. As demand for petroleum grows and domestic production dwindles, many governments are pressing national oil firms to go outside their own borders to secure reserves.

"China and Malaysia are quite aggressive in upstream acquisitions," Ramachandran said.

A top Indian oil official recently suggested that India needed to invest $1 billion a year for the next 10 to 15 years to secure its oil requirements.

"We should be in a position to get that kind of money. IOC alone won't be able to do it. ONGC alone won't be able to do it. But combined we should be in a position to do it," Ramachandran said.