Saudi Aramco eyes Indian demand, plans JV by 2018
It also plans on investing in the country. Oil Minister Dharmendra Pradhan and Aramco CEO Amin Nasser, also attending the India Energy Forum, were present at the inauguration.
What is it all about?
Pradhan mentioned in a tweet that, "Saudi Aramco's Office in India will help in turning the existing buyer-supplier relationship to a strategic partnership in the HC (hydrocarbon) sector."
Meanwhile, the firm's chief executive Amin Nasser informed Reuters that his firm has opened up dialogues with several Indian refiners and plans on initiating a joint venture deal within the next year.
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Why come here now?
Aramco's decision to launch an Indian subsidiary i.e. Aramco Asia India is also in lieu of its ongoing talks with the IOC-led consortium of state-run refiner-marketers to acquire a stake in the upcoming Rs. 40,000 crore coastal refinery in Maharashtra.
As Aramco is looking to have an IPO next year, getting refinery stakes in major oil-consuming countries is a crucial requirement for the firm.
Where will it invest?
State-run Aramco's CEO informed that the firm plans on investing in India's downstream sector i.e. refining, petrochemicals, and others.
Saudi Arabia, which is competing with Iraq to become India's top oil provider, has recently promised massive investments in Indonesia and Malaysia too, so that it gets long-term oil supply deals from these countries.
Therefore, the same can be expected here in the near future.
How can both entities benefit?
At present, approximately 19% of India's crude oil and 29% of LPG comes from Saudi Arabia. In the CY16-17, almost 39.5 million tonnes of crude was imported from Saudi Arabia by India.
International Energy Agency believes that India's refining capacity will fall short of its growing fuel demand in the future. For that, investment in new plants will be needed and Aramco can help.
Expect announcements soon
Nasser said, "India by itself is an important market. The size of India's market is huge. The growth in India last year is 8% last year as compared to 1.5% globally in energy."
Oil Minister Dharmendra Pradhan stated that Aramco is vested on investing in refinery projects and "very soon they will come to India."
Aramco Asia India
Aramco CEO Amin Nasser