Indian Oil Corp has agreed to supply refined products to Nepal for the next five years to meet all the fuel needs of the landlocked Himalayan nation, officials said on Monday.
India has supplied all Nepal's fuel needs since 1974 and is keen to maintain close trading ties with its neighbour in South Asia, an area where regional rival China has sought to expand its influence.
Indian Oil Corp, the nation's biggest refiner, would supply 1.3 million tonnes a year of refined fuels to Nepal, the company's chairman B. Ashok told a news conference.
As well as refined products, India was discussing plans to supply gas to Nepal, Indian oil minister Dharmendra Pradhan said at the same news conference.
The minister said the two nations were considering building a refined products pipeline linking Motihari in India's eastern state of Bihar to Amlekhgunj in Nepal.
He did not give details of the pipeline plan.
New Delhi has used its surplus refining and power generation capabilities to deepen ties with nations such as Sri Lanka, Bhutan, Bangladesh and Myanmar, as well as Nepal.
China wants to include Nepal in its flagship "One Belt, One Road" initiative to link Asia with Europe, the Middle East and Africa.