Aramco picks up 50% stake in $44b refinery

Saudi oil major to dilute some of its stake in Ratnagiri project later

Saudi Aramco, the world's largest oil producer, on Wednesday signed an agreement to pick up a 50 per cent stake in a planned $44-billion (Rs 3 lakh crore) refinery-cum-petrochemical project in Ratnagiri, Maharashtra, a move that will give it an assured customer for additional 30 million tonnes of its crude oil.

Aramco, at a later date, plans to dilute some of its 50 per cent stake in the 60 million tonne-ayear refinery project in favour of another strategic investor, Saudi Oil Minister Khalid Al Falih said.

The Saudi oil major will supply half of the crude oil required for processing at the refinery, he said.

State-owned refiners Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) will own the remaining 50 per cent stake.

"As large as this project may be, this does not by itself satisfy our desire to invest in India. Aramco will not stop discussing other opportunities because we see India as a priority destination for our investment and energy supplies," he said.

Like other major producers, Aramco is looking to lock in customers in the world's thirdlargest oil consumer through the investment. The UAE and Kuwait too are looking at investing in projects in return for getting an assured offtake of their crude oil.

Saudi Arabia was the biggest oil supplier to India till 2016-17 fiscal year, but slipped behind Iraq last fiscal. It had supplied 39.5 million tonnes of crude oil to India in 2016-17, ahead of 37.5 million tonnes by Iraq.

But in the first 11 months of

2017-18 fiscal, Saudi supplies at 33.9 million tonnes lagged behind Iraqi exports of 42.4 million tonnes to India.

"We have always said that India is going to get priority in terms of supply of crude oil and certainly that assurance is only going to be increased with this massive investment on the ground," Al Falih said, adding that Saudi Arabia was keen to supply not just oil but petrochemical and fertilisers to India as well. He said Aramco is also keen on venturing into fuel retailing.

"The project is designed as 50:50 (joint venture between Indian and foreign companies). There is a domestic block by three Indian companies (holding 50 per cent). We are managing the international block," he said.

"Saudi Aramco will initially assume 50 per cent, but we have the option of introducing another international partner if it is in the interest of the project. There is one international company which has already expressed interest and we have taken note of it and in due course we will address it," he added.

Saudi Aramco CEO Amin Nasser signed a memorandum of understanding (MoU) with Ratnagiri Refinery & Petrochemicals, a consortium consisting of IOC, HPCL and BPCL. Currently, IOC holds a 50 per cent stake in RRPL, while HPCL and BPCL have 25 per cent stake each. After Aramco's entry, the 50 per cent stake will be split in same proportion between IOC, HPCL and BPCL. Besides Saudi Aramco, Abu Dhabi National Oil Co (Adnoc) has also shown interest in taking a stake in the project. The refinery-cum-petrochemical complex is expected to be commissioned by 2022.