5 Minutes Read
Saudi Aramco buys 50% stake in Ratnagiri refinery complex
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
Listen to the Article (6 Minutes)
Summary
The MoU was signed on sidelines of the International Energy Forum (IEF) conference.
Saudi Aramco, an oil company, has signed a memorandum of understanding with Maharashtra’s Ratnagiri refinery complex.
The MoU was signed on sidelines of the International Energy Forum (IEF) conference.
Dharmendra Pradhan, oil minister, said that the capacity of the refinery is 16 million metric tonnes per annum.
Pradhan, keeping the domestic demand need on priority, said the firm and its Indian partner have been requested to expedite the west coast project.
Khalid al-falih, Saudi Arabia’s petroleum minister, said, that the country is happy to invest in India. Saudi Arabia has always been a major oil supplier to India. Being aware that India’s priority is to meet its demands on oil, he is confident that the crude supply will only increase with Aramco’s investment in India.
Saudi Arabia will supply half of the 60 million tonne capacity, Khaild said.
He pointed that the firm is going to continue looking for more opportunities and is eager to to provide all products such as chemicals and fertilisers to India.
Pradhan said that 50% of the domestic block will be led by the state-owned firms, i.e. IOC, BPCL, HPCL and Aramco will lead the other half in the $44 billion dollar oil refinery.
Indian being a large economy has always had an increasing demand for energy. Khalid said that Saudi Arabian companies have been directed to invest in India’s energy and infrastructure sectors.
For agriculture, the fertiliser manufacturing will help India’s agriculture sector. Saudi Arabia is keen on investing into India’s retail business of all petroleum products. The Ratnagiri plant will have an 80 metric tonne of petrochemical production, Khaild said.
(With inputs from PTI)
Amin H Nasser, President and CEO of Saudi Aramco discusses the company’s future in India.
Edited Excerpts:
Give us more details on the memorandum of understanding (MoU) that you have signed and what kind of stake does Saudi Aramco really hold on to this one?
We are really excited about signing MoU in presence of the two ministers — the Indian minister and our energy minister. This is definitely a major agreement between Saudi Aramco and three Indian companies — Bharat Petroleum, Hindustan Petroleum and Indian Oil. The three companies get 50% of this agreement and 50% for Saudi Aramco. This is a major integrated refinery and petrochemical complex with capacity of 1.2 million barrels per day, 18 million tonne of chemicals, so it is a major investment by Saudi Aramco in the Indian market.
India is one of the big markets for Saudi Aramco. So, what is your sense on partnering on to other areas, products as well? How are you looking at that? Are you in conversation with the other companies too?
We have deals with a lot of Indian companies. They are strategic partners in many ways. We supply close to 800,000 barrels per day in the Indian market. So it is an important market for Saudi Aramco. The growth is very significant in the Indian market. Not only in oil and petrochemical sector, so it is of strategic importance and we are trying to create alliance and joint ventures (JVs) with our partners. We have interest for a long time. This is the first time we culminate all of these efforts with major agreement through this MoU. We are looking as for further growth opportunities within the Indian market. As you highlighted there is growth opportunities, especially in the petrochemical sector as well.
His Excellency, the minister highlighted that there is also interest from other companies such as SABIC in the Indian markets. For Saudi Aramco it has to be integrated between refining and petrochemicals. Hopefully, there will be more agreements in the future.
The Indian Prime Minister also mentioned on how the maths adds up to an estimate that we are looking at 4.3% energy consumption growth for the next 25 years from now. Is that what we are working with? How do you see then Saudi Aramco being the part of this growth as one of the major players in this space?
As highlighted by the Prime Minister it is 4%. Indian market today imports over 4 million barrels oil. By 2040, the consumption will be close to 10 million barrels and that is very high growth rate. We are the biggest supplier of crude oil in the world. We have the highest reserves available. We are the most reliable player in the market and we have a huge interest in the Indian market and we are through this JV, which is 1.2 million barrels per day and hopefully through other JVs we continue to meet and participate in that growth potential in the Indian market.
Last time I remember when we spoke India was just grappling and understanding the impact of goods and service tax (GST) and then, of course, we have had other policy reforms and another reforms as well? What has your observation been on how India has changed or opened up to the international markets?
We went through a lot of things and discussions with our partners and all what we have looked at it meets our requirements in terms of participation and as highlighted by His Excellency that the reforms introduced by the Prime Ministers and all are on the right directions helping bringing additional investment to the Indian market.
Saudi Aramco also is spreading itself out in other countries. You recently closed a big deal with France as well. Which are the other countries that the company right now looking to partner with?
Just in the last week, we announced major expansion in our Port Arthur Refinery in US with an investment close to $9-10 billion. Two days ago we announced MoU with TOTAL our partners for also petrochemical expansion to refinery in Saudi Arabia. We have a JV with TOTAL and also it is close to $9 billion of investments.
We just also closed the deal with our partners PETRONAS for 300,000 refining and petrochemical complex in South Johor and hopefully that facility will be on stream next year. We are working with the Chinese, our partners China Petrochemical Corporation (CPC) and Sinopec about potential also JVs in China.
We are also working with our partners in Indonesia regarding refining in Cilacap and hopefully that will also be finalised soon with our partners there.
There is another question which is about Saudi Aramco’s IPO. It has been a subject of a lot of conversation. Is it getting listed this year or the date has been pushed to 2019 and also what exchanges, what countries are you looking to list?
The process for listing Saudi Aramco is on track. It means the preparation for listing the company in the second half of 2018 is ready. The listing will definitely happen in the local stock exchange in the Kingdom. The government will decide on the rest.
Also there is so much happening in the global markets, let us talk a bit about that also because we are looking at the crude oil prices very volatile, there has been the whole import tariffs, geopolitical concerns, would you look at these things at short-term phenomena? If yes, than what are the factors that you see having long term implications when it comes to the energy sector?
There is a healthy growth in the market in terms of the demand. If you look at IEA or EIA- in terms of the demand growth for the last three years you are looking at between 1.5 and 1.6 million barrels. So for three years the demand growth is around 5 million barrels per day. Of course, there is a lot of talk about transformation, which is happening in terms of renewable, electric vehicles and that is taking place definitely. But, it is starting from a low base. We have always said if you look at electric vehicles, the total consumption by electric vehicles is around 100,000 barrels per day.
So, there is a growth, but it is starting from a small base. There is a healthy demand and there is also a natural decline that is happening in existing yields and the natural decline is between 3-5%. So, out of 100 million barrels of supply, there is a need of an additional capacity to offset the decline, which is between 3 million and 5 million barrels per day and meet the additional demand, which is around 1.5 to 1.6 million barrels per day. You need between 3 and 5 million barrels per day of additional capacity to offset the decline and meet the additional demand.
What we are seeing in the market that there is not enough capital being injected by the companies to meet the additional demand requirement in the future. There is USD 1 trillion of capital investment that is either deferred or cancelled and that will have an impact over the long term in terms of meeting the demand requirements. So, there is a transition that is happening, but there is also heathy demand that needs to be met.
What is the kind of demand that you would say or rather the investment that the energy sector has to see to ensure the demand is met over the coming next decade now?
We are in an industry where, of course, to bring any project that takes you between three to five years in terms of additional supplies. Shale oil is definitely bringing additional supply. There is healthy growth in shale oil. Last year almost 600,000 barrels, this year there is a talk about 800,000 barrels of additional supply. But that alone is not enough, even though there is a lot of capital being injected to bring additional shale oil. The decline rate in shale oil is very significant. There is a decline of 70% than the first year.
Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout
3 Mins Read
Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter
Daily Newsletter
