State-owned Indian Oil Corp (IOC) is mulling setting up a Rs. 30,000 crore refinery at Mundra in Gujarat as part of a plan to increase its processing capacity to 100 million tonnes.

IOC has seven refineries with a total capacity of 54.2 million tonnes and subsidiary Chennai Petroleum Corp operates a 11.5 million tonne plant.

A coastal refinery would enable IOC to ship in larger quantities of heavier grades of crude oil, which are cheaper because they are more difficult to process into fuels.

"We want to set up a coastal refinery on the west coast. We have been hunting for land for a 15 million ton a year refinery and now have two sites - the Mundra port of the Adanis and another minor port in Maharashtra," a senior IOC official said.