Adnoc, Aramco to jointly develop Ratnagiri refinery
OIL MERGER Project to be 50:50 JV between Indian consortium, Aramco, Adnoc NEWDELHI:
The world’s biggest oil producer, Saudi Arabian Oil Co., or Saudi Aramco, has roped in Abu Dhabi National Oil Co. (Adnoc), the state-run oil company of the United Arab Emirates (UAE), to jointly develop one of the largest global refinery and petrochemicals complex by capacity coming up at Ratnagiri in Maharashtra.
“Saudi Aramco and Adnoc signed an MoU (memorandum of understanding) today to jointly develop and build an integrated refinery and petrochemicals complex at Ratnagiri in Maharashtra,” the government said after the agreement was inked in New Delhi on Monday.
The development on the 60 million tonnes per annum (mtpa) project marks the growing importance of buyers at the centre of oil major’s growth plans and assumes significance given that the UAE supplies 6% of India’s crude oil imports. With three million barrels per day of crude oil production, Adnoc is the world’s 12th largest producer and also a member of the Organization of the Petroleum Exporting Countries (Opec), which accounts for about 83% of India’s total crude oil imports and 40% of global production.
Mint reported on June 21 about Adnoc’s plans to pick up a 25% stake in the $44 billion project refinery and petrochemicals complex project, post which Saudi Aramco and Indian Oil Corp. Ltd will hold 25% each in the project, while 12.50% each will be held by Hindustan Petroleum Corp. Ltd (HPCL) and Bharat Petroleum Corp. Ltd (BPCL).
Given its large volumes, any project with a capacity of over 15 mtpa is referred to as international economic capacity in industry parlance. Experts say by that yardstick, Ratnagiri Refinery and Petrochemicals Ltd (RRPCL) is mega project.
When the memorandum of understanding for the RRPCL was signed in April by Saudi Arabia’s energy minister Khalid Al-Falih, it was announced that Saudi Aramco might induct a strategic partner by divesting its 50% equity stake in the project. The project has been facing protests by farmers.
“RRPCL which is promoted by a consortium of India PSUs consisting of IOCL, BPCL and HPCL will now have Saudi Aramco and Adnoc as overseas strategic partners. The project will be set up as a 50:50 joint partnership between the consortium from India and Saudi Aramco and Adnoc. This will be the single largest overseas investment in the Indian refining sector,” the government said.
The MoU was signed between Saudi Aramco president and CEO Amin H Nasser and UAE’s minister of state and Adnoc Group CEO Sultan Ahmed Al Jaber during the ongoing visit of UAE’s foreign affairs and international cooperation minister Sheikh Abdullah bin Zayed bin Sultan Al Nahyan.
Adnoc has a presence in India’s evolving energy security architecture, with it being the only firm to commit to India’s crude oil reserve programme till date. Experts welcomed the move driven by India’s market potential.
“Traditionally, India has followed the refinery protection pricing (RPP) regime with an aim to encourage investments. Being one of the world’s largest and fast growing crude consumers, India is a meritorious destination for global crude producers given the long crude market expected in decades to come,” said Deepak Mahurkar, partner and leader India oil and gas industry practice at PwC.
RPP is the pricing formula favourable to refineries based on which they sell petroleum products to the oil marketing companies.