Saudi oil minister calls on Indian counterpart, pushes JV plans

Minister of energy, industry and mineral resources of Saudi Arabia and chairman of Saudi Aramco, Khalid A Al-Falih, on Saturday met minister of petroleum and natural gas and skill development and entrepreneurship Dharmendra Pradhan in New Delhi on Saturday.

This is the second visit of Saudi oil minister to India in less than three weeks. Al-Falih was in India to attend the wedding of richest Indian Mukesh Ambani’s son Akash.

Al-Falih last visited India on 20 February as part of the high-level delegation that travelled with Saudi Crown Prince Mohammed bin Salman for a bilateral visit.

The meeting is a follow-up to the first state visit of Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud, deputy prime minister and minister of defence of the Kingdom of Saudi Arabia in February this year. 

This visit also reflects the intensifying engagement between the two countries in the hydrocarbon sector. Saudi Arabia is the second largest supplier of crude and LPG to India. In 2017-18, India’s crude oil imports from Saudi Arabia were 36.8 MMT, accounting for 16.7 per cent of our total imports. 

During the meeting, Pradhan referred to Saudi Arabia’s pre-eminent role as a leading producer of crude oil in the world, and in maintaining global oil market balance. He raised concerns about increasing trend in global crude oil prices. He also pointed to the need for uninterrupted supplies of crude oil and LPG to India in view of the Opec+ cuts. Both ministers also discussed the possible adverse impact of recent geopolitical developments on global oil market. 

The ministers also reviewed various Saudi investment proposals in the Indian oil and gas sector, including the urgent steps to be taken to expedite the implementation of the first joint venture West Coast Refinery and Petrochemical Project in Maharashtra, estimated to cost $44 billion, which will be the largest greenfield refinery in the world. Saudi Arabia’s participation in Indian Strategic Petroleum Reserve (SPR) Program was also discussed. 

Both the ministers agreed to take concrete steps for early implementation of  the decisions taken in the oil and gas sector during the visit of the Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud to India last month.

The Saudi oil minister, after his earlier visit to the Ambanis in December 2018, had tweeted that the world’s largest oil exporter Saudi Arabia and Ambani-run Reliance Industries are discussing joint investments in petrochemicals, refinery and communications projects.

And, during a 20 February visit, Saudi Aramco CEO Amin Al-Nasser had spoken about talks with Reliance for investments in refinery and petrochemical projects.

Reliance operates two refineries at Jamnagar with a total capacity of 68.2 million tonnes per annum.

Reliance plans to expand its only-for-exports SEZ refining capacity to just over 41 million tonnes from the current 35.2 million tonnes but does not have any plans to set up a new refinery in the country.

Reliance is currently focused on expanding its petrochemicals and telecom business.

Saudi Arabia, meanwhile, is looking for a foothold in the world’s fastest-growing market for oil, which would ensure the company a captive market for its crude oil it produces.

Saudi Aramco, the world’s biggest oil company, and its partner Abu Dhabi National Oil Co (ADNOC) plan to jointly pick up 50 per cent stake in a $44-billion refinery planned to be set up in Maharashtra but the project is facing problems in land acquisition.

Aramco and ADNOC will together hold 50 per cent stake in the 60 million tonnes per annum (MTPA) refinery and adjacent 18 MTPA petrochemical complex planned to be built at Ratnagiri district of Maharashtra by 2025.

The two will also supply half of the crude oil required for processing at the refinery.

India has a refining capacity of 247.6 million tonnes, which exceeds the demand of 206.2 million tonnes.

According to the International Energy Agency (IEA), this demand is expected to reach 458 million tonnes by 2040.