HPCL eyes refinery in Saudi Arabia

Kingdom may help set up commercial oil storage facilities in Indi

Petroleum Minister Mani Shankar Aiyar said Hindustan Petroleum Corporation Ltd (HPCL) was interested in setting up a refinery in Saudi Arabia. India was also looking for long-term crude contracts with the West Asian nation, he added.

"HPCL is interested in setting up a refinery in Saudi Arabia, which would be oriented towards Indian markets as well as third world country markets," Aiyar told reporters before leaving for a three-day visit to Saudi Arabia to boost bilateral investment in the hydrocarbon sector. Besides the hydrocarbon sector, Aiyar also intends to discuss setting up commercial oil storage facilities in India with the help of Saudi Arabia. "There are a number of complicated issues to be resolved in this regard. I do not expect a definite conclusion on this," he said.

India plans to build oil reserves of five million tonnes by 2008 to cover 15 days' domestic demand for oil products.

Indian Oil Corporation is working out the details of the project, while the funds are to made available by the government. A proposal to levy a cess for the reserves was earlier under examination.

On long-term crude supplies, Aiyar said, "Let us see if we are able to lock-in certain quantities and negotiate on the rest on a yearly basis."

India currently imports 24 million tonnes crude oil from Saudi Arabia, constituting nearly 26 per cent of its overall imports. India imports nearly 70 per cent of its crude oil requirements.

India is also inviting Saudi investment in oil refining and fuel retailing and exploring opportunities to invest in developing gas fields in the oil-rich nation.

India's crude oil imports from Saudi Arabia have risen four folds, from 6 million tonnes in 1999-2000 to nearly 24 million tonnes in 2003-04. At present, Saudi Arabia accounts for 26 per cent of the total crude oil imported by India.