India's ONGC Petrol Additions Ltd is negotiating the sale of half its $4.6-billion petrochemicals plant with Saudi Aramco, unnamed sources told Bloomberg. The negotiations are still private, the source said, and follow earlier talks with Kuwait Petroleum Corp.
India's demand for petrochemicals is thriving, so for Aramco the investment would be a lucrative one: the middle class is growing, so is urbanization, and these two are driving higher the consumption of polymers. In fact, India currently accounts for a third of the global consumption of polymers, and this portion will only grow from here. According to analysts, the country's petrochemical market will expand by an annual rate of 12 percent over the next few years.
Saudi Arabia held a 19.5-percent share of the Indian oil market last year, losing the top spot to Iraq, with Iran following closely. Still, the Kingdom supplies a lot of crude to India and has been expanding its footprint in the petrochemical industry in Asia in general.
Earlier this year, Aramco agreed to invest $7 billion in a refinery and petrochemical complex in Malaysia, in partnership with local state major Petronas. At the end of last year, the Saudi giant struck a deal with Indonesia's Pertamina for the $5-billion expansion of the country's biggest refinery, in Java.
In its regional expansion, the world's biggest oil exporter is betting big on India. Two weeks ago reports emerged that Aramco is in talks to buy a stake in a planned refinery expected to be built on India's west coast that would be the country's biggest refinery and would cost around $30 billion, Indian Oil Minister Dharmendra Pradhan said on Thursday.
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State-run companies Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) are planning to build the refinery, in which IOC would have 50 percent and BPCL and HPCL would hold 25 percent each.
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. More