New Delhi: Abu Dhabi National Oil Co (Adnoc), the state-run oil company of the United Arab Emirates (UAE), may pick up a 25% stake in the largest global refinery and petrochemicals complex coming up at Ratnagiri in Maharashtra.
Adnoc, the only company to commit to India’s crude oil reserve programme till date, plans to acquire the stake from the world’s biggest oil producer, Saudi Arabian Oil Co., or Saudi Aramco, which has partnered with a consortium of Indian state-run companies for the $44 billion project.
This is significant given that the UAE supplies 6% of India’s crude oil imports. With three million barrels per day of crude oil production, Adnoc is the world’s 12th largest producer.
“Post Adnoc’s acquisition of a 25% stake, Saudi Aramco and Indian Oil Corporation Ltd will hold 25% each in the project, while 12.50% each will be held by Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL),” said one person aware of the development, requesting anonymity.
When the memorandum of understanding for the 60 million tonnes per annum (mtpa) Ratnagiri Refinery and Petrochemicals Ltd (RRPCL) was signed in April by Saudi Arabia’s energy minister Khalid Al-Falih, it was announced that Saudi Aramco might induct a strategic partner by divesting its 50% equity stake in the project. Apart from investing in the project, Saudi Aramco will also provide crude oil to the project, ensuring supply security.
“Aramco has the freedom to offload to anyone, including Adnoc,” said an Indian government official, requesting anonymity.
News wire agency Press Trust of India on 12 May reported Adnoc’s interest in the project.
With buyers at the centre of its growth plans, Adnoc has a presence in India’s evolving energy security architecture. The first consignment of 2 million barrels of crude oil from the UAE reached the strategic petroleum reserve at Mangaluru in May.
Indian Strategic Petroleum Reserves Ltd (ISPRL) has an agreement with Adnoc under which the latter will store crude oil at its own cost. This agreement was signed during Prime Minister Narendra Modi’s visit to the UAE in February. While the oil storage facility will enable Adnoc to meet market demands across Asia, it will also allow it to sell part of the crude oil to Indian refineries in normal times.
The UAE is a member of the Organization of the Petroleum Exporting Countries (Opec), which accounts for about 83% of India’s total crude oil imports and 40% of global production.
Queries emailed to Saudi Aramco, Adnoc, HPCL, BPCL and the ministry of petroleum and natural gas in India on 14 June remain unanswered. An Indian Oil Corporation spokesperson said in an emailed response: “It is the prerogative of Saudi Aramco to bring in (an) additional partner, if any. As and when something is firmed up, we shall inform you of the same.”
The project has been facing protests by farmers, who oppose the refinery and are refusing to surrender land, fearing it could damage a region famed for its Alphonso mangoes, vast cashew plantations and fishing hamlets.
Adnoc’s presence in India’s energy midstream sector will help the world’s third-largest energy consumer after the US and China. India’s worry over crude oil prices stems from its energy needs being primarily met through imports.
As there was a rally in global oil prices, the cost of the Indian basket of crude, which averaged $56.43 a barrel in 2017-2018, rose to $75.31 (average price) in May 2018, according to data from the Petroleum Planning & Analysis Cell, an arm of the oil ministry. The price was $71.69 a barrel on Monday. The Indian basket represents the average of Oman, Dubai and Brent crude.