In a bid to bring the largest foreign direct investment (FDI) into the country, Abu Dhabi National Oil Company (ADNOC) and Saudi Aramco on Monday signed an Memorandum of Understanding (MoU) to jointly develop and build an integrated refinery and petrochemicals complex at Ratnagiri in Maharashtra. The initial pact will take a stake in the planned $44-billion or about Rs 3,00,000 crore-refinery in the state where Saudi Aramco is looking at the project as a vehicle to enter India's entire energy 'value chain' including fuel retailing.
The mega project will be implemented by Ratnagiri Refinery & Petrochemicals ltd (RRPCl). The pact was signed between Saudi Aramco President and CEO, Amin H Nasser and H E Dr Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO.
As far as the project is concerned, Aramco and ADNOC will together hold 50 per cent stake in the 60 million-tonne-a-year refinery and adjacent 18 million-tonne-petrochemical complex while the remaining half will be split between state-owned Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCl) and Hindustan Petroleum Corp (HPCl). For both Saudi Arabia and UAE, 'strategic business investment with the world's fastest growing oil consumer has reached an irresistible tipping point,' said Amin H Nasser, CEO and President of Saudi Aramco.
Aramco, which had at the time of signing the original agreement to a 50 per cent stake in the planned project in April stated that it will bring a partner at a later date, is looking at not just refining its oil in the refinery but also selling downstream products in the market. “Saudi Aramco is determined to go a step further. We will support our investment with a large fully-integrated oil business in India that will cover the entire value chain in partnership with local companies who know their markets best,” he told the reporters after signing of the agreement.
Asked how much stake would ADNOC and Aramco hold in the project, he said, “Between us it is 50 per cent and terms of how much percentage for each is being discussed between the two partners.”
As per the April agreement, Aramco is to supply half of the crude oil required for processing at the refinery that will be commissioned by 2025. ADNOC will now supply some of the crude to be processed at the unit. “With oil demand almost doubling to 10 million barrels per day by 2040, India's access to adequate, affordable oil has never been more important,” Nasser said.
However, Oil Minister Dharmendra Pradhan said Saudi Arabia has always been a trusted and reliable supplier of crude for India and key element of India's energy security. like other major producers, Aramco and ADNOC are looking to lock in customers in the world's third-largest oil consumer through the investment. Kuwait too is looking to invest in projects in return for getting an assured offtake of their crude oil.
last year, Saudi Arabia invested in refinery projects in Indonesia and Malaysia that came with long-term crude oil supply deals. Saudi Arabia was the biggest oil supplier to India till 2016-17, but slipped behind Iraq last fiscal.