The Indian newspaper The Economic Times is reporting that Saudi Aramco is seeking to buy a majority stake in a proposed refinery and petrochemical complex to be located in the western Indian state of Maharashtra, citing anonymous sources familiar with developments.
The complex, valued at 3 trillion rupees (US$46.10 billion), is currently owned by the Indian state firms Indian Oil Corp. (with a 50% stake), Bharat Petroleum Corp. (25%) and Hindustan Petroleum Corp. (25%).
It is anticipated that the refinery, to be commissioned by 2022, will have a throughput capacity of more than 300 000 bpd.
Saudi Aramco is believed to have been engaged in talks with the three companies for several months, and hopes to gain marketing rights over fuel and petrochemicals produced at the refinery as well as an assurance that oil originating from Saudi Arabia will be predominantly used.
A person familiar with the negotiations said: “They have just drawn the starting line. Only after the negotiations have concluded, you would know what Aramco has finally got.”
A potential stumbling block in negotiations was highlighted by another of the anonymous sources: “Giving Aramco the majority stake is just out of the question. If we can’t have the majority stake in our own project, on our own land, then where. The demand on sourcing of crude can be considered since India already uses Saudi oil a lot but the refinery can’t be solely dependent on oil from just one country.”
Saudi Aramco has yet to comment on the matter.
The negotiations come as Saudi Arabia’s presence in the Indian market has recently weakened; Iraq overtook it in 2017-18 to become India’s biggest crude oil supplier.
India’s oil demand is expected to surge in the coming decades, presenting clear investment opportunities for Middle Eastern oil producers – India currently imports the majority of its crude from the Middle East.
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