Policy
Shale-Rich North America Calls For Strategic Long Term View
more...


Indian PSUs May Get More Oil & Gas Assets In Middle East
more...


Crude Price Fluctuations: From Panic To Relief To Uncertainty
more...


Oil Field Privatization May Hugely Benefit Vedanta Ltd.
more...


Oil Marketing Companies To Expand Retail Pump Network
more...

Regulation
ONGC To Assign Top G&G Talent To 4 CoDs Of Priority Plays
more...


IOC To Encounter Resistance In Exporting Refinery Technology
more...


Refineries Wrestling With Options To Deal With Fuel, Pet Coke
more...


Status Of Shale Gas And Oil Development: An Official Assessment
more...

Alternative Energy / Fuel
Ethanol Blending With Petrol Target To Be Doubled
more...

New Projects
Sapura Energy Secures $720 Million Contract In India
more...


Asian Oilfield Services Awarded Contract By ONGC
more...

Market Watch
Tata Motors Signs Agreement With Savita Oil Technologies
more...

Companies
Foresight Group International
more...


OIL Starts CSS Of Well In Rajasthan
more...


GEECL To Invest $2bn In Raniganj (South) CBM Block
more...


Maharashtra Seamless Bags Equipment-Supplies Order From ONGC
more...

Press Release [FREE Access]
Petro Intelligence Ľ Kuwait Prefers A Distance From Saudi

by R. Sasankan

Saudi Arabia appears to have kicked off a big petro-dollar investment craze for large refinery and petrochemical projects in India. When petroleum minister Dharmendra Pradhan had first started to drum up investor interest in a big-ticket mega refinery project on India’s west coast, many had dismissed it as just another pie-in-the-sky dream. No one had really believed that he would be able to persuade Saudi Arabia to pick up a 50 per cent stake in the proposed 60 million tons per annum project. But when the Saudis interest was piqued and they decided to stump up the money, it surprised everyone in government and caused a stir in the refinery and petrochemical industry.

sabah al ahmad al jaber al sabahSaudi Arabia is going through a phase of radical reform – a time when it has started to quickly jettison stuffy, dyed-in-the-wool notions about governance, investment and socio-cultural practices and embrace out-of-the box ideas to shake up traditionalist thinking in the rich, oil kingdom. Saudi Arabia has become a hothouse of surprises in recent months. But an investment on such a massive scale had never been expected in a country that has never been on its investment radar. Clearly, there must have been long and deliberate deliberations on this proposal before they decided to commit the funds.

India has been buying crude from the Middle East countries for many years as the region had been geographically close to it. The leadership in India – dating back to the regime of Indira Gandhi – had tried but failed to attract big petro-dollar investments. The Middle Eastern oil-rich countries have always looked to the West for investment opportunities, a fervour that remains undiminished. But India has managed to chip away at the reservations that these countries had about investing in India, largely because of the fact that it has since emerged as one of the world’s fastest-growing economies and is currently the third largest importer of crude.

All this has been written about fairly extensively. But an innocuous question that was raised by an oil industry executive at an informal get-together in Delhi recently piqued my interest and forms the basis for this article. There have been a number of reports in the media suggesting that the UAE may also be eager to pump money into the west coast mega refinery project. The UAE has already signed a deal with India to fill up a part of the large crude storage tank at Mangalore in the state of Karnataka and has also roped in an Indian PSU as its equity partner in a major oilfield that it plans to develop. The question was about Kuwait. Would it also be keen to join the mega refinery since it also has been scouting for investment opportunities in India’s refinery sector?

Mohammad Bin SalmanI decided to bounce this question off to a few oil industry experts who know the Middle East well. My understanding about these three countries was superficially right: all the three Middle Eastern nations are very friendly with the US and opposed to Iran. In the Middle East, the perception is that it is Saudi Arabia that is fighting Iran, a Shia country, and, therefore, Kuwait should not have any problem in joining the mega refinery project as an investor. But that assessment is based on an insufficient understanding of the reality in the Middle East. Soon after Saudi Arabia decided to invest in the mega refinery, Kuwait started scouting for refinery projects in India where they could invest. It was not looking for new refinery projects but actually scoping out opportunities in existing PSU refineries. It had almost zeroed in on the Bina refinery project which is a joint venture between the stated-owned BPCL and Oman Oil Company.

The reason is simple: Kuwait is different, and the Kuwaitis consider themselves to be superior to the Saudis. Such cultural differences exist in many parts of the world: the Swedes consider themselves to be superior to the Finns, and the French have a similar perception about the English. But the differences between the Saudis and the Kuwaitis run a lot deeper. These experts believe that Kuwait isn’t close to Saudi Arabia at all. They have never opted to collaborate while investing large sums of money in any project across the world. “If Kuwaiti investment is of the same order as the Saudis, then Kuwait will want control. And that will simply not be acceptable optically to the Saudis. The Saudis see themselves as the undisputed leaders of the Gulf nations which will not be acceptable to the Kuwaitis,” said an acknowledged expert on the Middle East.

This ought not to be a matter of great concern for Indian authorities. In fact, such differences actually work in India’s favour. Saudi Arabia has very ambitious investment plans for India and the refinery project is just one of them. Kuwait will not allow itself to be left far behind the Saudis. However, it will not try to get into a game of one-upmanship with the Saudis.

Kuwait may decide to invest in the petrochemical sector as well. If the investment plan for the Bina refinery does not work out, Kuwait may turn to IOC’s Paradip refinery. In fact, Kuwait entered the Indian market 15 years ago and almost decided to invest in IOC’s Paradip refinery project. It had even signed an MoU with IOC. It later withdrew from the project following differences with the IOC management over the terms of investment.

India has now become a major investment destination for petroleum projects. Its growing economic clout has also strengthened its bargaining position vis-à-vis investors. The Indian government is also playing its cards well: it would like to attract investment from the Middle East but it has no intention of dabbling in the internal politics of the region. That is the best way to attract investments and avoid controversy.

 



To download the latest issue 'Volume 25 Issue 17 - December 10, 2018', click here
Petro Intelligence [FREE Access]
RILís Pre-emptive Surgical Strike?
more...

One-Buck Dilemma For Private Fuel Retailers
more...

India Needs Affordable LNG
more...

When A Total Eclipse Overshadows Exxonís Ambitions
more...

Foreign Investment
AG&P To Invest Gas Infrastructure In India
more...

Overseas Investment
ONGC Gets $32 Million Payment From Venezuelaís PDVSA
more...

Gas Scene
Domestic Natural Gas Scene In October 2018
more...


Story Of Two LNG Terminals Of Petronet LNG Ltd
more...


CNG Growth Over The Years & CNG Sales as on 1st April, 2018
more...


LNG Terminals in India
more...


CGD Factsheet As Of Sept 2018
more...


A total picture about Natural Gas scene including CBM in India
more...


State-Wise Share In CGD Business
more...


Update: Sectoral Consumption of Natural Gas, LNG Import and Total Net Available Gas for Sale
more...


Domestic Gas Scene In September 2018
more...


Declining Rate Of Gas Flaring In ONGCís Fields
more...


Natural Gas In Indiaís Energy Basket
more...


Domestic Natural Gas Price & Global Natural Gas Price trends
more...


Updatew: Existing Gas Pipeline Network, Gas Pipelines Under Execution
more...


Gas pipeline network update
more...


An Update : Capacity Utilization of LNG Regasification Terminals
more...


Domestic Gas Prices & International Gas Prices
more...


Domestic Gas Scene In totality In Last 3 Years
more...

Data Section
Monthly Upstream Data
Monthly Downstream Data
Historical database
Data Archives
Special Database
Imported Crude & Domestic Crude Oil Processing
more...


Capacity Utilisation of Crude Oil Pipelines of IOC, OIL, Cairn, BORL, HMEL
more...


Declining Capacity Utilization of ONGCís Crude Oil Pipelines
more...


FOB Price Of Indian Basket Of Crude Oil
more...


Retail Selling Price & percentage of taxes in RSP of petrol and diesel in developed countries vs India
more...


Retail Selling Price (RSP) of major products in India & neighbouring countries
more...


Update Of Hydrocarbon Reserves In India
more...


Power Availability Improves In October 2018
more...


Resource Base of ONGC in E&P
more...


Sharp Decline In Petroleum Products Import In October
more...


Crude Oil Imports Up By 10.5 % In October, OPEC Share Dips
more...


Domestic oil & gas production vis-ŗ-vis overseas production (October 2018)
more...


Gross Refining Margin (GRM) of Indian Refineries FY 2019 (April-September)
more...


Shale Oil/Gas Drilling Performance in FY 2017-18
more...


IOCís Research & Development Makes Significant Contributions
more...


Oil and Gas Separation, Refineries, Gas Processing Plants, Olefin and Aromatic Mother Plants
more...


Update: Distillate Production in Indian refineries, total and break-up
more...


India: Oil Import - Volume, Value and Price USD / Barrel
more...


Power Shortage Situation In September 2018
more...


Update: Indiaís Crude Refining Capacity , Company-wise, Refinery-Wise As On August 1, 2018
more...


Indigenisation Level Of Hardware in Gas Transportation - LNG, Pipelines
more...


Petroleum Products Import In September Registers Impressive Growth, Export Declines.
more...


Crude Oil Imports Register Modest Increase In September, OPEC Share Down
more...

Tenders [FREE Access]
ONGC
more...


ONGC
more...