Saudi Aramco set to invest heavily in Indian fuel retail, petrochem market

Saudi minister assures no supply shortage to India, believes conventional fuel will continue to dominate the energy sector

After joining hands with India to be part of the Rs 3-trillion West Coast refinery project, the world's largest oil producer, Saudi Aramco, said on Monday that it will further be investing in the retail and petrochemical industry in India. 

"We will be looking at consumer-facing sectors India like fuel retail and petrochemicals, building an integrated downstream segment," said Khalid A Al-Falih, minister of energy of Saudi Arabia and Chairman of the board of Saudi Aramco. The Saudi Arabian minister assured that there will be no supply shortage to India, considering the higher price regime in the global energy market. 

Early this year, Saudi Aramco and Abu Dhabi National Oil Company (Adnoc) had formed a joint venture with Indian oil marketing companies to hold 50 per cent stake in the  60-million-tonne Ratnagiri Refinery and Petrochemicals (RRPCL) in Maharashtra, which is likely to be ready by 2022. 

The minister said that two Saudi energy majors, Sabic in the chemical sector and Maaden in phosphates, are planning huge investments in India. in addition to this, Falih said that Saudi Aramco is keen on investing in India's strategic crude oil reserves project. He was speaking at CeraWeek, organised by IHS Markit. 

Early in the day, CEOs and experts from the oil and gas sector in both India and abroad met Prime Minister Narendra Modi, who made a strong case for partnerships between the producers and consumers in the oil market, similar to those in other markets. He highlighted that the consuming countries, due to rising crude oil prices, face many other economic challenges including serious resource crunch. "The cooperation of the oil producing countries would be very critical to bridging this gap. The Prime Minister appealed to oil-producing countries to channel their investible surplus to pursue commercial exploitation in oil sector in the developing countries," a government statement said. 

Global leaders who were part of the meet included BP Plc chief executive Robert Dudley, Royal Dutch Shell’s Ben Van Beurden, Exxon Mobil's Darren Woods, RIL chairman Mukesh Ambani and Vedanta Resources head, Anil Agarwal. Energy ministers from various countries were also present. 

The Saudi leader indicated that current market prices are quite balanced.  He was responding to petroleum minister Dharmendra Pradhan's statement that severe headwinds have been faced by way of rising oil prices the past one year. Pradhan said crude prices have risen by 70 per cent in rupee terms since last CeraWeek. 

"We will continue to support the global economy, providing a cushion on pricing to consumers," Falih added. He said it was measures taken by countries like Saudi Arabia that ensured global prices did not hit the three-digit mark again. He added that 99.8 per cent of global vehicles are now run by conventional fuel and even after a decade, oil and gas will be the driving force of the energy market. 

Sultan Ahmed Al Jaber, chief executive officer of Adnoc, said that by 2040 India's fuel demand will rise by 160 per cent. "Even then, fossil fuels will make up 80 per cent of India's oil requirement," Jaber added.