Saudi Aramco and India's Ratnagiri Refinery & Petrochemicals signed a deal on Wednesday to construct a $44 billion refinery and petrochem project in India.
The refinery portion, to be located on India's West Coast, will be able to refine 1.2 million barrels per day, and goes a long way towards satisfying both India's and Saudi Arabia's interests. Saudi Arabia and the Indian consortium known as Ratnagiri Refinery & Petrochemicals, will each hold a 50 percent stake in the venture. Other reports have the capacity pegged at 300,000 barrels per day.
Saudi Arabia will supply half of the crude oil that will be refined.
India-the world's third largest oil consumer-has been pushing for reasonable crude oil pricing from The Kingdom. Saudi Arabia-once India's largest crude oil supplier-is now India's second largest provider of crude oil, after Iraq. The refining project will go a long way towards ensuring favorable crude oil supplies and will serve as partial fulfillment of India's earlier promise to increase its refinery capacity by 77 percent to 8.8 million barrels per day by 2030.
Saudi Arabia, for its part, has been looking to regain its position as top crude supplier to the thirsty Asian nation, and has been investing in other Asian refineries abroad in an attempt to lock in as much demand as it can. India is particularly mouthwatering for Saudi Arabia, as its demand for crude oil is expected to grow at a higher rate than even China.
Aramco, currently a 50 percent stakeholder in the project, announced that it may, in the future, seek partners to share in its portion of the refinery stake.
Saudi Arabia has been interested in India for quite some time, with Energy Minister Khalid al-Falih saying earlier of its Indian push that "All of these are illustrated commitments by the Kingdom and the company to be not only a supplier, but an investor in India at an unmatched scale."
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More