Saudi Aramco to take 50% stake in India’s Rs 3-trn West Coast refinery

The world’s largest oil producer Saudi Aramco on Wednesday signed a deal with India to take up 50 per cent stake in the Rs 3 trillion West Coast refinery. The company also offered an interest in foraying into petroleum retail business in India.

Saudi Aramco today signed a memorandum of understanding (MoU) with the three Indian oil marketing companies – Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) – to develop and build the planned refinery and petrochemical complex called Ratnagiti Refinery and Petrochemicals (RRPCL) in Maharashtra.

According to sources, the 60 million tonne refinery is likely to be completed by 2025 and at a later stage Aramco can rope in other partners like Abu Dhabi National Oil Company (Adnoc) that have shown interest in becoming a part of the project.

“There will be two blocks of investors that include 50 per cent of Indian companies and the remaining by a block of foreign companies. Later, we can bring in other interested parties as part of the foreign block,” said Khalid Al Falih, minister of energy and mineral resources of Saudi Arabia.

Falih added that his company will bring an assured supply of at least 50 per cent of the crude oil required for the project and new technologies as well. The refinery will be capable of processing 1.2 million barrels of crude oil per day (60 MT per annum) and will produce approximately 18 MT of petrochemical products per year.

Khalid Al Falih added that the entry of Saudi Aramco would bring lower cost of financing due to the company’s higher credit ratings. On the other hand, he added that the company may look to foray into petroleum retailing sector in India. “We are looking at other investment options like in retail and petrochemicals. We want retail and want to be consumer-facing also,” he said later. Responding to which India’s petroleum minister Dharmendra Pradhan said that the government will look into the regulatory aspects on retail sector following the Saudi interest.

Saudi Aramco President and chief executive officer Amin H Nasser said that the project will allow Saudi to go beyond the role of a crude oil supplier to a fully integrated position and the project is likely to be completed before 2025.

The refinery is to be at two locations in Ratnagiri, with the main complex on 14,000 acres in Babulwadi; about 15 km away would be the 1,000-acre storage and port facilities. When asked about the ongoing protests in the region against the project, Nasser said that Saudi is confident of the local partners sorting out the issue soon.