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India will be counting on the financial support of Saudi Aramco and Emirati Adnoc for its planned US$44-billion Ratnarigi refinery and petrochemicals project, the country’s oil minister told Bloomberg in an interview.
In March, India’s Economic Times reported Aramco was seeking the acquisition of a majority stake in Ratnagiri and that it also insisted on the marketing rights over the entire fuels and petrochemicals output of the 60-million-tons-a-year refinery. It also wanted assurances that the complex will use mostly Saudi crude for processing, unnamed sources close to the negotiations told the daily.
The refinery, which is currently 50-percent owned by Indian Oil Corporation, and by Bharat Petroleum and Hindustan Petroleum with 25 percent each should be completed by 2022 and will have a daily throughput capacity of 300,000 bpd of crude.
Now, according to Dharmendra Pradhi, Aramco may buy a 50-percent stake in the refinery and sell part of it to Adnoc, which like its sector player is eager to ensure markets for its crude in Asia, which is already the driver of global crude oil demand growth, with India at the forefront.
Related: India Is The Best Bet For National Oil Companies
The Abu Dhabi company has also gained access to India’s strategic petroleum reserve: this weekend, Adnoc said it will ship 2 million barrels of crude to the reserve, which will make it the first foreign company to enter it, Bloomberg reported. The 2-million-barrel cargo is only the first tranche of a 5.86-million-barrel crude shipment to India’s strategic petroleum reserve.
India is the natural center of gravity for oil producers. Its oil demand is set to grow at a faster rate than neighbor China, and it still imports most of its crude from Middle Eastern producers, while China is diversifying away from the Middle East. This makes India the perfect focus of an investment strategy aimed at ensuring a market for Saudi and Emirati crude and possibly marketing rights to refined products for additional revenues.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.