Two persons familiar with the talks confirmed that the country’s second biggest state-owned oil refiner was in discussions with one company each in Japan and China. A final decision is likely in two months, they said.

Propylene-based products such as acrylic acid and acrylates are used in plastics, paints, coatings, adhesives, inks and textiles. The company’s attempt to enter this niche segment, which is fully dependent on imports, depends on its ability to secure technology for the same.

This is BPCL’s second attempt in tying up technology for the industrial raw material, after talks with South Korea’s LG Chem Ltd failed in August 2013.

One of the people cited above said technology partners will be finalized within two months, after which the final investment decision would be taken.

“We are conducting a feasibility study and the report of the study should be out within a month,” the second person said.

B.K. Datta, director, refineries, BPCL, said: “Since LG (LG Chem) has walked, what we are doing is sourcing technology for the project through two means—buying technology licences which are available on purchase and tying up with players for protected or patented technologies.”

While he did not name the companies BPCL is talking to, he said there was only a handful of companies in the world with propylene-based technologies, and the company will finalize a deal with one of them within two months.

“Most of the details on products to be manufactured, land required for the project and investment remain broadly the same. We are in the final stages of signing a deal,” he said, adding once finalized, it would take the company up to three years to complete the project.BPCL has already acquired 100 acres for the Rs.5,000-crore project, earlier news reports had said.

The second person aware of the discussions did not mention the names of the firms BPCL was talking to, but said while Mitsubishi Chemical Corp. is one of the biggest players in Japan with technologies for propylene-based products, in China, the major companies are China Petroleum and Chemical Corp., or Sinopec, and China National Petroleum Corp. CNPC).

US-based LyondellBasell, once an acquisition target of Reliance Industries Ltd (RIL), is the world’s biggest propylene technology firm.

“The demand for petrochemical products is always there in India, but prices and margins are governed by the trends in the world. We are expecting the down-cycle in petrochemical margins to turn in three years, which will be highly beneficial for RIL. With BPCL also entering the market in three years, it can also corner good margins,” said Dhaval Joshi, analyst with brokerage Emkay Global Financial Services Ltd.

Petrochemicals being a subsidy-free business, it would be an ideal diversification for BPCL, which is aiming to produce oil and gas in the next four years and become a fully integrated energy player, Joshi added.

The proposed petrochemical plant is part of an integrated refinery expansion project currently on at the Kochi refinery, under which the company is investing Rs.14,255 crore and increasing the capacity of the refinery from 9.5 million tonnes per annum (mtpa) to 15.5 mtpa by December 2015, according to the company’s annual report published in July 2013.

According to the company’s website, the Kochi refinery is presently producing petrochemical feed stocks such as benzene, toluene and propylene, which will be used as feedstocks to produce their derivatives.