It is funny how friendly someone gets when they’re trying to sell you something. Saudi Arabian Oil Co. is doing its best to make nice with one of its biggest customers. With the ink barely dry on the takeover of 70% of the country’s chemical giant Saudi Basic Industries Corp. and the issuance of its first-ever corporate bond, Aramco is looking to buy a stake in the world’s biggest oil refinery. Indian billionaire Mukesh Ambani’s Reliance Industries Ltd. is seeking to sell as much as a quarter of its refining business for at least $10 billion and is entertaining offers from Aramco and Abu Dhabi National Oil Co., people with knowledge of the matter told Bloomberg News this week.
That represents quite a prize. Reliance’s Jamnagar refinery is about twice the size of the biggest US plant, Aramco-owned Port Arthur, and is so massive that maintenance work occasionally skews India’s entire trade balance. Trade is also the reason India should be cautious of Aramco’s embrace. The country has a dangerous addiction to imported crude, and it should be wary of getting too cozy with its dealer. For more than a century, the rise of major economic powers has been fuelled by petroleum. The US is both the world’s biggest oil consumer and its biggest producer. The Soviet Union was built on its oilfields in the Caucasus and Siberia. While China has overtaken America as the biggest oil importer, it is also the biggest producer outside the Middle East after the US, Russia and Canada.
