State-run Indian Oil Corp expects oil product exports to rise to three million tonnes in 2004-05 from two million tonnes in the current year with higher sales in South Asia and Mauritius, a company official said.

IOC has a $100-million term contract to supply 30,000 tonnes of gas oil and 10,000 tonnes of jet fuel a month to Sri Lanka for one year and is selling 0.8 million tonnes of products to Nepal.

Its exports to Sri Lanka are expected to double as it has acquired 100 petrol stations in the island and is taking over more retail outlets to take its share of petrol stations to more than 30 per cent.

"Apart from the term contract we are selling another 40,000 tonnes of products to Sri Lanka," N K Nayyar, IOC's director of business development, told Reuters.

He said the company had an agreement to buy six cargoes of 40,000 tonnes each from Mangalore Refinery and Petrochemicals Ltd to supply products to Sri Lanka.

Later this year, IOC will also set up petrol stations in Mauritius and send gas oil and gasoline from Indian refineries if the volumes are adequate, he said.

Nayyar estimated that Mauritius needs one million tonnes per year (tpy) of products across the barrel.

IOC is also in talks to sell products to Bangladesh from its refinery at Chennai in southern India, and to Myanmar from refineries in northeastern India, Nayyar said.

It has offered half a million tpy of gas oil to Myanmar as its refineries in northeastern India are located close to the Myanmar border, he said.

The company is also in talks with Bangladesh to supply at least half a million tpy of products, Nayyar said.

"We have a surplus capacity and our neighbours are short of products. Our strategy is to get into government-to-government deals to sell products," he said.

He said state-run IOC preferred term deals as it was seeking secure markets and could better plan refinery operating rates.

The company has also drawn a list of several countries where it could set up petrol stations, he said, but did not give details.