Saudi Aramco picks up 50% stake in Maharashtra refinery
Saudi Aramco will pick 50 percent stake in the proposed $44 billion refinery-cum-petrochemicals complex being developed by Indian state refiners.
This will be one of the biggest foreign investment in the country's hydrocarbon sector and bring in the world's biggest oil producer right into the centre of the world's third-largest oil consumer of the world. Last year, Russia's Rosneft had purchased stake in a 20 million tonnes refinery in Gujarat.
'India has always been a priority destination for us. It’s geographically adjacent to the Kingdom, it has a large population with a large economy,' said Saudi Arabia Energy Minister Khalid al-Falih. 'The reforms that Prime Minister Modi has brought over the last few years has been nothing short of a gamechanger.'
Indian Oil, Bharat Petroleum and Hindustan Petroleum will hold the balance 50 percent stake in the proposed refining complex that is planned to be completed before 2025. Aramco has the option to offload part of its 50 percent stake to a foreign player in future and one firm has already expressed interest for that.
The facility will have the capacity to process 60 million tonnes of crude oil in a year, and also produce 18 million tonnes of petrochemical products a year.
Saudi and Indian firms signed a preliminary agreement on Wednesday after months of negotiations. Precise equity contribution of each player will be determined once the final project report is ready with clarity on financing.
Aramco's participation will bring expertise to the project and also cut its financing cost, Falih said.
Aramco will continue to look for other investment opportunities in Indian oil and gas sector, including an entry into fuel retailing.
'We are very much interested in retail. We want to be consumer facing. Aramco wants to be in every neighbourhood,' Falih said.
Several terms, including on crude sourcing by the proposed refinery and marketing of produce, are still open and being negotiated between Saudi and Indian partners. Saudi Aramco will supply at least 50 percent of crude supply, according to the current agreement.
Saudi Arabia is the second-largest supplier of crude oil to India. A stake in the proposed refinery would mean assured market for Saudi oil in India at a time producers are scrambling to secure market for their supplies.
A global supply glut has kept oil prices lower since mid-2014 and shifted the balance of power towards heavy oil consumers like India and China.
This will be one of the biggest foreign investment in the country's hydrocarbon sector and bring in the world's biggest oil producer right into the centre of the world's third-largest oil consumer of the world. Last year, Russia's Rosneft had purchased stake in a 20 million tonnes refinery in Gujarat.
'India has always been a priority destination for us. It’s geographically adjacent to the Kingdom, it has a large population with a large economy,' said Saudi Arabia Energy Minister Khalid al-Falih. 'The reforms that Prime Minister Modi has brought over the last few years has been nothing short of a gamechanger.'
Indian Oil, Bharat Petroleum and Hindustan Petroleum will hold the balance 50 percent stake in the proposed refining complex that is planned to be completed before 2025. Aramco has the option to offload part of its 50 percent stake to a foreign player in future and one firm has already expressed interest for that.
The facility will have the capacity to process 60 million tonnes of crude oil in a year, and also produce 18 million tonnes of petrochemical products a year.
Saudi and Indian firms signed a preliminary agreement on Wednesday after months of negotiations. Precise equity contribution of each player will be determined once the final project report is ready with clarity on financing.
Aramco's participation will bring expertise to the project and also cut its financing cost, Falih said.
Aramco will continue to look for other investment opportunities in Indian oil and gas sector, including an entry into fuel retailing.
'We are very much interested in retail. We want to be consumer facing. Aramco wants to be in every neighbourhood,' Falih said.
Several terms, including on crude sourcing by the proposed refinery and marketing of produce, are still open and being negotiated between Saudi and Indian partners. Saudi Aramco will supply at least 50 percent of crude supply, according to the current agreement.
Saudi Arabia is the second-largest supplier of crude oil to India. A stake in the proposed refinery would mean assured market for Saudi oil in India at a time producers are scrambling to secure market for their supplies.
A global supply glut has kept oil prices lower since mid-2014 and shifted the balance of power towards heavy oil consumers like India and China.
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