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, a government official said on Thursday.
Modi will be speaking at the investment summit organized by Saudi Arabia's Public Investment Fund. The event is popularly known as Davos of the Deserts.
“We are well on our way to transforming the buyer-seller relation in this sector to a larger strategic partnership,” said T.S. Tirumurti, a top official who handles economic relations at India’s foreign ministry.
India, which imports more than 80 percent of its oil needs, is keen to strengthen its relations with Saudi Arabia, the world's top oil exporter, from just being an oil buyer.
India, the world's third-biggest oil consumer, is a key client of Saudi Arabia. In September, Saudi Arabia emerged as top oil supplier to Indian after a gap of over a year, data obtained for shipping and industry showed.
“We have also invited the Saudi side to participate in India’s strategic (oil) storage and we hope to finalize an MOU during this visit” of the prime minister, said Tirumurti.
Separately another official said that ISPRL, 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 storage, 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 would continue to rise 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 in a multibillion-dollar deal.
Saudi Arabia’s Crown Prince Mohammed bin Salman during a visit to New Delhi in February said the kingdom sees investment opportunities worth more than $100 billion 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 finalize and move ahead on the west coast refinery,” Tirumurti said without elaborating if a final agreement would be signed during Modi’s visit.
“The Middle East unit of India's top refiner and fuel retailer, Indian Oil Corp, will sign a preliminary deal with Saudi Arabia’s Al Jeri company for cooperation in the downstream sector, including setting up fuel stations in the kingdom.”