MNA � India�s biggest refiner Indian Oil Corp Ltd said on Wednesday that Iran may still invest in a refinery expansion project at one of its subsidiaries.

Indian Oil�s chairman Sanjiv Singh said that Iran has not ruled out participating in the expansion at Chennai Petroleum Corp Ltd, a south India-based 20,000 barrels per day (bpd) refinery, Reuters reported.

Iran�s participation has been questioned after India cut back its Iranian crude oil imports following US sanctions.

However, Singh�s comments come a few days after India exempted rupee payments to the National Iranian Oil Co (NIOC) for crude oil imports from a withholding tax.

The exemption will allow Indian refiners to settle about $1.5 billion of outstanding payments to NIOC through direct rupee payments.

It has been expected that these payments could help Iran invest in Indian projects, particularly the Chennai Petroleum Corp expansion.

�Iran has always been positive with this (the new rules). I think they should be able to invest,� Singh told Reuters, following a media conference on Wednesday.

Chennai Petroleum plans to invest up to 356.98 billion rupees ($5.1 billion) to replace the 20,000 bpd Nagapattinam Refinery in Southern Tamil Nadu state with a 180,000-bpd plant.

Naftiran Intertrade, the Swiss subsidiary of National Iranian Oil Company, holds a 15.4% stake in Chennai Petroleum, while Indian Oil has about a 52% share.

MR/PR