India today said it has offered Saudi Arabia a stake in the mega oil refinery and petrochemicals project proposed in coastal Maharashtra at an estimated cost of Rs 1.5 trillion.
"Recently, I met Saudi officials with an offer of a stake in the proposed mega refinery project in Maharashtra, for which we have already appointed Engineers India as the PMC (project management consultants).
"We have also finalised the contours of the special purpose vehicle that will carry out this large project," Union Petroleum Minister Dharmendra Pradhan told reporters after launching a road-show for auctioning 46 small oil and gas fields to prospective investors.
The minister parried questions about Saudi Arabia's response and also how much equity the government was willing to offer.
The statement assumes significance as the minister had last week said that Saudi Aramco, the national oil company of Saudi Arabia, which is also the world's largest oil and gas company in terms of reserves and output, is keen to enter the domestic oil distribution market.
It is also a sign of the growing bilateral ties between New Delhi and Riyadh.
On December 28 last year, Pradhan had sprung a surprise by asking the three state-run oil refiners -- IndianOil, BPCL and HPCL -- to get ready to set up the largest refining and petrochemicals complex in the public sector before 2017-end on the west coast of Maharashtra with an investment of Rs 1.5 trillion.
The minister said work on the 60-million tonne project (40 MT in the first phase and 20 MT in the second phase) will begin once the Maharashtra government identifies and acquires the land.
Maharashtra will also be an equity partner in the project, apart from IndianOil, Bharat Petroleum Corporation and Hindustan Petroleum Corporation.
However, details of the equity ownership are yet to be worked out.
Pradhan had said that global oil major Total was also keen on tapping the domestic retail fuel market.
India, the world's fourth-biggest oil consumer, witnessed the fastest oil demand growth globally in the first quarter of 2016, the International Energy Agency (IEA) said in its latest report. It added that India is replacing China as the driver of growth globally.
As per IEA, domestic oil demand is set to rise to 550 mmtpa by 2040 from 165 mmtpa now.
"Saudi Aramco is eager to enter the domestic fuel retail market, and we are finding ways to help them," Pradhan had said last week.
Saudi Aramco, considered the world's most valuable company with an estimated trillion-dollar valuation as per the reserves it holds, is set for a public offer to help Saudi government tide over the huge financial trouble arising from falling oil prices.
Fuel marketing has turned profitable after government ended decades-old control over the retail prices of petrol and diesel. Following this, local private refiners like Reliance and Essar Oil have started opening their mothballed fuel stations and are adding new ones to expand business.
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