Saudi Arabia is the second largest supplier of crude and LPG to India.
India has invited Saudi Arabia to invest in its strategic oil storage even as it looks to resurrect a USD 44 billion (Rs 3.08 lakh crore) refinery project with the world's largest oil producer after the BJP-ruled Maharashtra government denied land at the initial site.
Saudi Oil Minister Khalid Al Falih, on his second visit to India in three weeks, discussed with its Indian counterpart Dharmendra Pradhan the 60 million tonne (MT) a year mega oil refinery cum petrochemical complex, whose initial allocated land in coastal Ratnagiri district of Maharashtra was denotified by the state government earlier this month, as part of electoral understanding between the ruling BJP and Shiv Sena.
"The (two) ministers reviewed various Saudi investment proposals in the Indian oil and gas sector, including the urgent steps to be taken to expedite the implementation of the first joint venture West Coast Refinery and Petrochemical Project in Maharashtra, estimated to cost USD 44 billion, which will be the largest greenfield refinery in the world," an oil ministry statement said on March 10.
The two minister held talks late last night. Shiv Sena had opposed the project at Ratnagiri district and the BJP agreed to its demand of shifting out the project as part of electoral understanding for the ensuing Lok Sabha polls.
No alternate site of the project has yet been identified and the statement did not elaborate on steps to be taken for implementation of the project.
Saudi Aramco and its partner ADNOC of UAE have signed agreements to take 50 percent stake in the project. The remaining is held by public sector oil firms - IOC, BPCL and HPCL.
Pradhan invited Saudi Arabia to invest in India's strategic oil reserves. "Invited HE @Khalid_AlFalih to partner in India's Strategic Reserves Program and further enhance Saudi investments in India's refining & petrochemical sectors. Strategic engagements in energy will mutually benefit both our countries and further bolster our bilateral ties," he tweeted after the meeting.
The official statement said: "Saudi Arabia's participation in Indian Strategic Petroleum Reserve (SPR) program was also discussed."
India has built 5.33 MT of emergency storage enough to meet its oil needs for 9.5 days, in underground rock caverns in Mangalore and Padur in Karnataka, and Visakhapatnam in Andhra Pradesh. It has allowed foreign oil companies to store oil in the storages on the condition that the stockpile can be used by New Delhi in case of an emergency. .
Abu Dhabi National Oil Company (ADNOC) has hired half of the 1.5 million tonne strategic oil storage at Mangalore and 2.5 million tonne Padur facility. In Phase-II, India plans to build an additional 6.5 million tonne facilities at Chandikhol in Odisha and Padur, which is expected to augment the emergency cover against any supply disruption by another 11.5 days.
India, which meets 83 percent of its oil needs through imports, built the storages as insurance for any disruption in supplies. It has the right of first refusal to buy the crude oil stored in the facilities in case of an emergency.
The statement said that the visit of the Saudi Oil Minister was a follow up the first State visit of Saudi Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud last month.
"Both the ministers agreed to take concrete steps for early implementation of the decisions taken in the oil and gas sector during the visit of His Royal Highness Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud to India last month," it said. The visit, it said, reflects the intensifying engagement between the two countries in the hydrocarbon sector.Saudi Arabia is the second largest supplier of crude and LPG to India. In 2017-18, India's crude oil imports from Saudi Arabia were 36.8 MT, accounting for 16.7 percent of its total imports.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.