Saudi to meet India’s oil demand, absorb supply shocks

India’s Petronet LNG says talks to invest in Qatar have slowed

NEW DELHI, Oct 15, (RTRS): Saudi Arabia is committed to meeting India’s rising oil demand and is the “shock absorber” for supply disruptions in the oil market, Energy Minister Khalid alFalih said on Monday.

India, the world’s third biggest oil importer, is grappling with a combination of rising oil prices and falling local currency. Retail prices for gasoline and diesel fuel in India are at record highs and the government has cut its excise tax on fuel to ease some of the pain for consumers.

While there are many factors that could influence global oil prices, Saudi Arabia and other major producers will continue to act to cushion the market from oil price shocks, Falih said at the IHS CERA conference.

“We could have another (round of) unanticipated disruptions that we have seen in Nigeria, Libya, Venezuela. And we have seen sanctions on Iran. These supply disruptions need a shock absorber and the shock absorber to a large extent has been Saudi Arabia,” he said.

“We have invested tens of billions of dollars to build spare capacity of 2-3 million barrels per day over years,” he added.

Saudi Arabia has the capacity to produce 12 million bpd and is currently producing 10.7 million bpd, Falih said, adding that production will rise further next month.

Falih said oil prices would “easily be at the three digit range had it not been for the extra effort the kingdom has done over many years by investing in capacity and then unleashing that capacity, delivering barrels over last few months, reversing inventory draw down.”

Brent crude prices were trading 80 cents a barrels higher at $81.23 by 1157 GMT.

Prices hit a four-year high of $86.74 a barrel earlier this month as the market grapples with the expected loss of Iranian exports due to U.S. sanctions.

Falih said he told India’s Prime Minister Narendra Modi and Petroleum Minister Dharmendra Pradhan that Saudi Arabia is committed to meeting its growing oil demand.

State oil company Saudi Aramco plans to supply Indian buyers with an additional 4 million barrels of crude oil in November, several sources familiar with the matter said last week.

Falih also said Saudi Arabia wants to invest in Indian downstream projects and strategic oil storage.

“Saudi Aramco’s desire is to invest in consumer-facing segments such as retail fuels and petrochemicals, building an integrated downstream business in India as well as our commitment to invest in strategic storage,” Falih said.

India plans to build two strategic storage facilities to hold 6.5 million tonnes of oil costing around 110 billion Rupees ($1.6 billion) through a joint partnership between an Indian state firm and private company.

Falih also said Saudi Basic Industries Corp (SABIC) is keen to invest in India’s chemicals sector.

Saudi Aramco has an initial pact to take a 25 percent stake in the planned 1.2 million bpd West Coast refinery.

Also:

NEW DELHI: India’s Petronet LNG Ltd said on Monday its talks to invest in Qatar’s exploration and production sector had “slowed down,” as the company had not been able to reach an agreement on pricing with the Middle Eastern nation.

“Qatar is still at a very preliminary stage. We were actually looking at getting the molecule (gas) at the well head price. They want to sell it at market price,” said Prabhat Singh, managing director of Petronet LNG.

Petronet LNG, India’s biggest liquefied natural gas (LNG) importer, wanted to partner with ONGC Videsh Ltd (OVL) , the overseas arm of India’s biggest explorer Oil and Natural Gas Corp Ltd, to pick up a stake in an upcoming exploration and LNG project in Qatar.

The project would have been Petronet’s maiden venture into the natural gas exploration and production business and overseas LNG terminals.

Under the initial non-exclusive agreement signed with QatarGas, Petronet LNG was to get access to QatarGas’s data rooms for evaluation of the project within a month’s time.

A non-exclusive agreement allows QatarGas to speak with other interested parties about the project in addition to Petronet.

The upstream project was to feed into a 23 million tonnes per annum LNG terminal.

“There is merit in the project and we are considering (it),” Singh said, adding that as Petronet would be investing in the project, it would have to make economic sense.

Qatar is looking at a potentially bigger participation by Indian firms, and wants an entire consortium of companies to come together and invest in the Gulf nation, Singh said.

Petronet currently runs a 15 million tonne per annum LNG regasification site at Dahej in the western state of Gujarat and a 5 million tonne refinery at Kochi in southern India.

Petronet LNG buys 8.5 million tonnes a year of LNG from Qatar under a long-term contract. It also buys additional volumes from Qatar under spot deals.

Several other Middle Eastern nations that are major oil and natural gas exporter to India, including Saudi Arabia, the United Arab Emirates and Iran, are looking closely at establishing long-term strategic partnerships in the southern Asian country.