SAUDI ARABIA (OBSERVATORY) – Oil prices of $ 70 per barrel and above are of great concern to India and very pleased with Saudi Arabia, which has big plans for the fastest growing market in the world.
The Saudis have already confirmed their readiness to join the project to build an oil refinery for $ 30 billion in the Indian subcontinent.
“India would like to see prices at $ 50 per barrel in order to better manage their finances,” Dharmendra Pradhan, the oil minister, said in an interview with The Times of India.
Meanwhile, Saudi Arabia, which needs “black gold” at least $ 80 to realize its grandiose plans, calls fixing in India part of its strategy to provide sources of consumption of its oil.
The government of Narendra Modi has benefited immensely from the biggest drop in hydrocarbon prices in the last couple of decades in the first term in power. Now the prime minister has begun preparations for the general elections scheduled for 2019, and rapidly rising prices can greatly harm his political ambitions.
Saudi Arabia, the world’s largest exporter of crude oil, is in turn preparing for the initial public offering of its state oil producer’s shares (IPO) and is trying, together with OPEC members and Russia, to limit oil production in order to eliminate the global surplus of hydrocarbons that led to a decline in prices.
“We are very price sensitive consumers,” Pradhan explains, “From the point of view of Indian consumers, I would be more happy if the price was around $ 50 per barrel.” According to him, Saudi Arabian Oil Co. (better known as Saudi Aramco) has agreed, in principle, to join the planned on the West coast of India refinery capacity of 1.2 million barrels per day.
Amin Nasser, chief executive of Saudi Aramco, is due this week to sign a protocol of intent for the plant with Ratnagiri Refinery & Petrochemicals (RRPC), a consortium of state oil refineries Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation, a source in Indian government.
It is expected that under the agreement, Saudi Aramco will receive 50% of the project. In addition, the Saudis will have to attract another strategic investor.
“Everything is on the table, and we have an intensive dialogue,” Pradhan said, referring to Saudi Arabia’s participation in the project. “It must be a win-win deal for both parties, which should be beneficial for them and for us.” He confirmed that a preliminary agreement will be signed with Aramco.
Saudi Arabia holds the status of the main supplier of oil to India, despite the fierce competition with other producers in one of the most valuable markets in the world. India, which imports about 80% of the required oil, is trying to diversify its sources of hydrocarbons and is seeking more favorable terms from producers in the Middle East.
A potential partnership in India will be a continuation of Aramco’s strategy to consolidate its market share by investing in refineries in Asia, a region that is driving the growth in global oil demand.
Over the past few years, the Middle Eastern kingdom has spent billions of dollars on projects in Malaysia and Indonesia, as well as a new refinery and petrochemical plant in China.
It is expected that Saudi Energy Minister Khalid Al-Falih will take part in the 16th International Energy Forum in New Delhi this week.