Aramco eyes more India deals, plans to double capacity

Ending speculations of will it or will it not, Saudi Arabia has finally made its entry into the Indian oil sector with Saudi Aramco, the world's largest oil producer, signing an MoU with a consortium of Indian refiners to set up a mega refinery project here.

Saudi Aramco, the world's biggest oil exporter, is moving to invest in refineries overseas to help lock in demand for its crude, and expand its market share ahead of an maiden offering that is expected later this year or next year.

India is the world's third biggest consumer of crude after the US and China, accounting for four per cent of world consumption in 2015, according to the US Energy Information Administration.

"This project illustrates our strategy of maximizing the integration of our large refining and petrochemical platforms and of expanding our petrochemical operations from a low-priced feedstock, to take advantage of the fast growing Asian polymer market", said Patrick Pouyanne, the chairman and chief executive of Total.

The project would bring huge benefits to the region, the State of Maharashtra and the entire country in terms of large-scale employment generation, direct and indirect, as well as all-round economic development of the region.

As per the MoU signed, the project will be a 50:50 joint partnership venture between Aramco and a consortium of Indian oil companies, including the IOC, BPCL and HPCL.

Saudi Arabia Energy Minister Khalid al-Falih speaks with the media during the International Energy Forum (IEF) in New Delhi, India, April 11, 2018. "We want to be in every neighbourhood, every city, providing energy solutions", he said.

Saudi Arabia has been edged out as the top oil supplier to India amid an intensifying race among producers to retain their most-prized markets.

"Geographical information systems allow us to further enhance our upstream operations, safety procedures, project management, our detection and monitoring capabilities, and the preservation of our wide-ranging assets", he said.

Last year, Aramco said it would invest 18 billion United States dollars in Motiva to increase the capacity of the Port Arthur facility and move to petrochemical production. The preliminary deal for the construction of a 1.5 million tonnes a year steam cracker and petrochemicals units has already been signed between the two companies. Aramco has a refinery joint venture with Sinopec and Exxon Mobil, and is building a 300,000-bpd refinery with Norinco.

What's left unsaid is that this move will give Saudi Arabia a new outlet for its oil.