India hopes to sign energy deals with Saudi Arabia that include its participation in India’s strategic petroleum reserve, during Prime Minister Narendra Modi‘s visit to the kingdom next week, an Indian government official said on Thursday.
Modi will be speaking at the investment summit organised by Saudi Arabia’s Public Investment Fund – an event dubbed Davos in the Desert.
“We are well on our way to transforming the buyer-seller relation in this sector to a larger strategic partnership,” said TS Tirumurti, a top official who handles economic relations at India’s foreign ministry.
India – the world’s third-biggest oil consumer – imports more than 80 percent of it the oil that it needs. It is eager to strengthen its relations with Saudi Arabia, the world’s top oil exporter, from just being a key oil-buying client.
“We have also invited the Saudi side to participate in India’s strategic [oil] storage and we hope to finalise a memorandum of understanding during this visit [of the prime minister],” said Tirumurti.
Separately, another official said that Indian Strategic Petroleum Reserves Limited, a wholly-owned subsidiary of India’s Oil Industry Development Board, will sign an agreement with Saudi Aramco to lease part of the 2.5 million-tonne Padur oil-storage reserve, in southern Karnataka state.
India has built underground emergency storage in three places to protect itself from any disruption.
So far, Abu Dhabi National Oil Co (ADNOC) is the only foreign company that is storing oil in India’s strategic reserve at Mangalore in southern Karnataka state. Last year it signed a preliminary agreement to use half of the Padur strategic reserve.
Global oil producers, seeking a stable outlet for their output, are also eager to gain a foothold in India, where fuel demand is projected to continue rising in years to come.
Saudi Aramco along with ADNOC has signed a preliminary deal with Indian state-run companies for a 50 percent stake in the planned 1.2 million barrels per day (bpd) mega refinery on the country’s west coast.
Aramco is also eyeing a 20 percent stake in the petrochemical and refining business of Reliance Industries Limited in a multibillion-dollar deal.
Saudi Arabia’s Crown Prince Mohammed bin Salman said during a visit to New Delhi in February that the kingdom sees investment opportunities worth more than $100bn in India over the next two years.
“Our collaboration with Saudi Arabia in the energy front has been intensified further and the two sides are set to finalise and move ahead on the west coast refinery,” Tirumurti said without elaborating on whether a final agreement would be signed during Modi’s visit.
The Middle Eastern unit of India’s top refiner and fuel retailer, Indian Oil Corporation Limited, will sign a preliminary deal with Saudi Arabia’s’ Al Jeri Transportation Company for cooperation in the downstream sector, including setting up fuel stations in the kingdom, he said.