Aramco wants to partner IOC

Saudi Aramco is considering partnering Indian Oil Corporation for building strategic crude oil storage in India. Saudi Aramco president and chief executive officer Abdallah S Jum'ah met IOC chairman MS Ramachandran to discuss joint proposals.

"Saudi Aramco has said it will consider taking part in building 5 million tonnes of storage capacity for strategic crude oil in Viskhapatnam and Mangalore," Ramachandran told reporters later.

But on partnering IOC in the 15 million tonne per annum Paradip refinery in Orissa, Jum'ah said, "No. We did not discuss equity partnership (in Paradip refinery)."

Saudi Aramco, which showed interest in entering Indian petroleum products retail market, invited IOC to partner it in a 400,000 barrel per day refinery the company plans to set up in Saudi Arabia mainly for exports.

IOC has formed a special purpose vehicle (SPV) to set up strategic crude oil reserves for meeting the country's requirement in times of crisis.

The storage, equivalent to 15 days of oil consumption, will boost India's existing 7.3 million tonne of crude tankage and 6.8 mt product tankage capacity.

The estimated cost of constructing the storage facility would be about Rs 1,650 crore. The crude inventory will be cost about Rs 5,000 crore but would vary according to the international prices at the time of purchase and also on the quality of oil.

Officials said though giving an equity participation to a foreign company in a company managing strategic reserves was difficult, India could agree to have some kind of arrangement on purchase of crude from Saudi Arabia.

The existing crude oil storage capacity in the country can meet the oil requirement for only 19 days but with an import dependency of about 70 per cent this is considered insufficient.

Ramachandran said Saudi Aramco has assured it was committed to India, and New Delhi should consider it as its strategic storage partner.

Jum'ah said his country has been meeting India's demand and will continue to do so even during times of disruptions. India imported 23.5 mt from Saudi Arabia out of the over 90 mt of crude oil imports in 2003-04.

The company, which was one of the shortlisted bidders for Hindustan Petroleum Corporation Ltd (HPCL), made no specific proposals for its entry into the Indian market.