Saudi Aramco may buy Paradip stake

Indian Oil Corporation will offer a stake to Saudi Aramco in its oil refinery in Paradip, while the Saudi company will seek Indian participation in an export refinery in Saudi Arabia.

The two companies will be holding discussions on the same over the next few days. Saudi Aramco, which had earlier expressed interest in picking stake in Hindustan Petroleum, still wants to enter the refining and marketing business in India. It has, however, ruled out investment in the downstream exploration business.

According to Abdallah S Jum'ah, Saudi Aramco president and chief executive officer, a dollar invested in his own country gives better returns than that invested elsewhere.

Speaking to reporters on the sidelines of Petrotech 2005 today, Jum'ah said his company was seeking participation in a refinery for "many many years".

He, however, clarified that they were interested only in a strategic participation and would not be buying shares from the market. "We are trying to find opportunities. We are talking to all companies and trying to develop ideas," he said.

Saudi Aramco was looking at a capacity of more than 400,000 barrels day for export refinery in their country. Jum'ah, however, refused to say which Indian company they were in talks with.

IOC is setting up a 9 million-tonne refinery at Paradip which has been upgraded to a petrochemical refinery with an annual output of 15 mt. It is expected to cost over Rs 3,000 crore.

Jum'ah said Saudi Aramco is planning to put up a very large refinery, in excess of 400,000 barrels per day, in Saudi Arabia mainly for processing domestic crude oil and exporting products.

"We would like Indian companies to participate in it". Saudi Arabia is India's largest crude oil supplier with over 23 million tonnes out of the 90 million tonnes crude oil imported in 2003-04 coming from the Gulf nation.

"We are supplying 450,000 barrels per day of crude to India and are seeking larger volumes. We will be following the demand. As they require larger volumes, we will be there to supply it," Jum'ah said.

"We have been supplying to India forever and will supply forever. India is a very very important market and we will continue fuelling it," he said.

He, however, did not say if Saudi Arabia was willing to sell crude oil to India on long-term contracts instead of present one-year term contracts. "These (one-year contracts) are evergreen contracts and we will renew them".

Saudi Aramco sells close to 50 per cent of 9 million barrels per day crude oil it produces for Asia and it is geared up to meet any challenge to ensure steady supplies of energy, he added.

"We have never in our history failed to deliver a barrel of oil that we promised. Our supplies have not been affected by terrorism or otherwise. Our oil installations are prepared for all kinds of industrial disasters and industrial incidents have greater impact than terrorist attacks.

"We have created redundancies and our own security forces, besides the saudi arabian national agencies guard the installations," Jum'ah said, allaying fears of supply disruptions in case of a terrorist attack.