Saudi Aramco, Adnoc to join hands for petroleum retail in India

Adnoc to invest in Rs 3 trillion West Coast refinery

Saudi Aramco, the world’s largest oil producer, and UAE’s national oil company Abu Dhabi National Oil Company (Adnoc) are in talks to jointly foray into the retail petroleum and marketing businesses in India. 

On Monday, Adnoc also signed a memorandum of understanding (MoU) with the country’s big three oil marketing firms — Indian Oil Corporation (IOC), Bharat Petroleum (BPC) and Hindustan Petroleum Corporation (HPC) — to be a part of the Rs 3 trillion-West Coast refinery and petrochemicals project in Maharashtra. 

Both the foreign companies will jointly hold 50 per cent in the proposed refinery, while the Indian trio will hold the remaining stake. 

Additionally, Adnoc also expressed interest in acquiring stake in the Padur strategic oil reserves. The size of the project is around 2.5 million tonnes (MT). In February, Adnoc had signed a contract with India to fill 0.75 MT of space in the Mangalore strategic oil reserves cavern.

“This is a continuation of the MoU (for refinery) signed between Saudi Aramco and the three Indian oil companies in April. This is more of a strategic partnership among India, Saudi Arabia and the UAE,” petroleum minister Dharmendra Pradhan told the media on Monday. 

He added that Indian companies will also participate in the ongoing round of oil and gas auctions in the UAE and may tie up with local major Mubadala Petroleum for that. 

Saudi Aramco President and Chief Executive Officer Amin H Nasser said that the company wants to step into the full value chain. “We are exploring opportunities to have a tie up in retail petroleum and marketing with Adnoc. We are also in discussions with the three Indian companies.” 

According to the rules, if a player wants to foray into the retail sector, it should have a threshold investment of at least Rs 20 billion in the oil and natural gas sector or an equivalent bank bond undertaking.

The 60 million tonne Ratnagiri Refinery and Petrochemicals (RRPCL) in Maharashtra is likely to be ready by 2022, according to the central government. However, the recent protests led by the Shiv Sena, a partner of the ruling BJP government, regarding land acquisition had slowed the progress of the refinery. 

“Prime Minister Narendra Modi has assured us smooth acquisition of land. We expect the issues to be sorted out fast as it will have a positive impact on Maharashtra,” Nasser added. There is no official confirmation on how much stake Adnoc will hold in the venture. However, sources indicated that Saudi Aramco is likely to be the leading partner in the foreign block. 

According to the plans, Saudi Arabia is expected to supply at least 50 per cent of the crude oil required for the refinery and provide advanced technology. “Once ready, the refinery will process 1.2 million barrels of crude oil per day and produce approximately 18 MT of petrochemical products per year,” Pradhan added. Pradhan also welcomed the Opec move to raise output by 1 million barrels per day. 

The government is planning to acquire at least 15,000 acres near Babulwadi in Ratnagiri district for the project, touted as the world’s largest refinery.  

The MoU was signed between Nasser and Ahmed Al Jaber, UAE minister of State, and ADNOC’s Group chief executive officer. The strategic partnership brings together crude supply, resources, new technologies, experience and expertise of these multiple oil companies with an established commercial presence around the world. The project is expected to improve the nation’s GDP by around 2 per cent and about 12 per cent for Maharashtra.