India will be counting on the financial support of Saudi Aramco and Emirati Adnoc for its planned $44-billion Ratnagiri refinery and petrochemical project, the country’s oil minister told Bloomberg in an interview. Dharmendra Pradhan added that Aramco may buy a 50% stake in the refinery and sell part of it to Adnoc, which is eager to ensure Asian markets for its crude, which is already the driver of global crude oil demand growth, with India at the forefront, Oil Price reported.
The Abu Dhabi company has also gained access to India’s strategic petroleum reserve. This weekend, Adnoc said it will ship 2 million barrels of crude to the reserve, which will make it the first foreign company to enter it, Bloomberg reported.
The 2-million-barrel cargo is only the first tranche of a 5.86-million-barrel crude shipment to India’s strategic petroleum reserve. In March, India’s Economic Times reported Aramco was seeking a majority stake in Ratnagiri and also insisted on the marketing rights over its entire fuel and petrochemical output of the 60-million-tons-a-year refinery.
It also wanted assurances that the complex will use mostly Saudi crude for processing, unnamed sources close to the negotiations told the daily. The refinery, which is currently 50% owned by Indian Oil Corporation and 25% each held by Bharat Petroleum and Hindustan Petroleum, should be completed by 2022 and will have a daily capacity of 300,000 bpd of crude.
India is the natural center of gravity for oil producers. Its oil demand is set to grow at a faster rate than neighboring China. It still imports most of its crude from Middle Eastern producers, while China is diversifying away from the Middle East. This makes India the perfect focus of an investment strategy aimed at ensuring a market for Saudi and Emirati crudes, and possibly marketing rights to refined products for additional revenues.
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