State-run steel maker SAIL on Tuesday said it has signed an initial pact with Oman Oil Co to jointly set up a 3 million tonne per annum (mtpa) gas-based steel plant in Oman at an investment of around Rs 15,000 crore.

“Steel Authority of India has signed a Memorandum of Understanding with Oman Oil Company to set up a 3 mtpa steel plant,” Steel Minister Mr Beni Prasad Verma told reporters here.

SAIL Chairman Mr C S Verma said the final agreement with Oman Oil Co is likely to be signed within the next six months, after which, it will take 2-3 years for the plant to be operational.

“We are in the process of finalising the feasibility report and hope to sign the final agreement with Oman Oil Co in the next six months,” SAIL Chairman said.

The shareholding pattern of the proposed venture is yet to be decided, he said, adding that majority of the stake would be with SAIL.

“They (Oman) want to use our expertise. We want to capture the market. We will have majority stake in the venture,” Mr Verma said.

Oman consumes around 3-4 mtpa of steel in a year. However, steel making capacity in the Middle Eastern country is under 1 mtpa.

Mr Verma said the plant would use gas-based DRI (Direct Reduced Iron) technology for making both flat and long products, the two broad categories of steel products. While flat products are used in construction, Long ones are used in auto, white goods and consumer durables.

Mr Verma had earlier said that SAIL has signed a MoU with the Indonesian Government and were in constant dialogue with the governments in Mongolia, South Africa and Oman for setting up a 3 mtpa steel plant in each of the four countries, involving an investment of $ 12 billion.

SAIL has already embarked on a Rs 70,000-crore expansion plan to enhance its domestic production capacity from 14.35 mtpa to 23.46 mtpa by 2012-13.

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