HYDERABAD, India Oct 29 -

Indian Oil plans to sign a deal early next year to

form a joint venture with global trader Vitol as the state-run

refiner seeks to expand its footprint in international crude and

fuel trading, according to a source with direct knowledge of the

matter.

The move marks a strategic shift for India's largest

refiner, which is seeking to copy global oil majors like Exxon

Mobil ( XOM ) and Shell by leveraging Vitol's trading

expertise and global network.

The joint venture, to be based in Singapore, will initially

operate for five to seven years, the source said, adding that an

exit clause will be included for both partners.

Indian Oil, along with its subsidiary Chennai Petroleum,

controls about 31% of India's 5.17 million barrels per day (bpd)

of refining capacity. The company currently trades oil and fuel

primarily for its own refineries but now wants to become a

global player, the source said. The source did not want to be

identified by name due to the sensitivity of the matter.

The partnership with Vitol will help Indian Oil cut

crude-procurement costs from spot markets and improve margins

through access to new buyers, the source added.

The joint venture will also help the global fuel trader

strengthen its position in India as it seeks to position itself

as a global refining hub. India is the world's third biggest oil

consumer and importer.

India will raise its crude-refining capacity to about 6.2

million bpd by 2030 with long-term plans to scale further to 8

million to 9 million bpd, oil minister Hardeep Singh Puri said

on Tuesday.

He said the refining capacity expansion will consolidate

India's position among the top three refining hubs globally, as

around 20% of the existing global refining capacity - some 100

refineries - faces potential closure by 2035.

Indian Oil held talks with several firms, including BP

, Trafigura, and TotalEnergies, before teaming

with Vitol, the source said.

The refiner imports most of the crude processed at its 10

facilities, which have a combined capacity of 1.62 million bpd.

The planned venture is expected to help Indian Oil export

refined fuels and tap into Vitol's distribution channels.