Govt wants Saudi Aramco to develop strategic petroleum reserve: Report

India wants Saudi Arabia's Aramco to participate in its planned 6.5 million metric tons (MMT) strategic petroleum reserve (SPR) programme as the South Asian nation wants to strengthen ties with its key oil supplier, according to a document seen by Reuters.

The two nations have been talking about Aramco's participation in the SPR programme for years. The talks, however, gained traction after Crown Prince Mohammed Bin Salman's meeting with Prime Minister Narendra Modi last month.

"Under Phase II Strategic Petroleum Reserves Programme construction of two new commercial-cum-strategic petroleum reserves of 6.5 MMT have been approved," the Indian government said in an internal document, adding that "Saudi Arabia's Aramco can be invited to participate in the Phase II."

Aramco declined to comment, while the Saudi government did not respond to emails seeking comment.

India's prime ministers office, oil ministry and finance ministry did not respond either.

In 2021, India overhauled its SPR policy allowing commercial sale of the crude to boost private participation in the building of new storage facilities, mirroring a model adopted by countries such as Japan and South Korea.

India, the world's third-biggest oil importer and consumer, imports over 80% of its oil needs and has built strategic storage at three locations in southern India to store over 5 million tons of oil to protect against supply disruption.

Abu Dhabi National Oil Co (ADNOC) has leased 750,000 tons of oil storage in the 1.5 million ton SPR in the southern city of Mangaluru.

India has conducted two road shows for the second phase of its SPR programme that received interest from companies including Trafigura, British Petroleum, Petrochina, Hyundai, Gulf Energy, Glencore and Shell, a government statement said.

Regarding a potential deal between India and Saudi Aramco, KPMG Partner Anish De commented: "Getting the investment there will align the economic and political interest. There is good economic and political reasons for the two countries to do it."

During the visit by the crown prince to India, Saudi Arabia announced plans for an investment facilitation office in India's Gujarat International Finance Tec-City, a tax-neutral financial service centre.

India is also scouting for land to build a 1.2 million metric tonnes per year refinery and petrochemical project in western India with participation of Saudi Aramco and ADNOC.

The two governments will form a task force to remove hurdles like land acquisition, which has delayed the project, which was conceived in 2018. Saudi Arabia has committed $50 billion investment for the project.