Policy
Location Shifting Alone Won’t Solve Mega Refinery’s Problems
more...


IOC Prefers Stable Places For Acquiring Overseas E&P Assets
more...


PSU Oil Firms Increase Dividend Payouts To Government
more...


India’s Natural Gas Market Is In A Logjam
more...


Temporary Freeze On Retail Fuel Prices Looks Imminent
more...

Regulation
Move For Common Carrier Principle In LNG Terminals Dropped
more...


ONGC Advised To Review Its Overall R&D Strategy
more...


Massive Expansion Of Retail Outlets By PSU Oil Marketing Cos
more...


India Inches Towards A National Gas Grid
more...

Alternative Energy / Fuel
CIMFR To Start Pilot Project To Use Methanol As Alternative Fuel
more...


Ethanol Blending With Petrol Makes Impressive Progress
more...


GAIL And BHEL Sign MoU To Develop Solar Power Projects
more...

New Projects
KOC-Kuwait Awards Large Contract To L&T
more...


Chevron Lummus Global Wins Technology Contract From CPC
more...

Market Watch
Shell Deal Links LNG Prices to Coal
more...

Companies
Invenire Energy Private Limited
more...


Oil And Gas Companies Team Up For Rs 3.20 Billion Startup Fund
more...


Vedanta Reports Oil Discovery In Krishna-Godavari Basin
more...


IGL & Tata Power Signed MoU To Offer Integrated Services
more...

Press Release [FREE Access]
Petro Intelligence » Saudi Tweet Stokes A Storm Of Speculatio

by R. Sasankan

US President Donald Trump and Indian Prime Minister Narendra Modi tend to wear their hearts on their sleeves – and have never shrunk from articulating whatever is plaguing their minds, usually through a blizzard of tweets. It can get very unnerving when the world’s leaders turn to social media and thumb messages covering a range of weighty subjects. The world’s statesmen in the past have been known to agonise over each and every word while communicating their views on topics that could cause ripples around the world.

Khalid al-FalihBut the Twitter-happy universe in the world of petroleum was in for some shock when Saudi Arabia’s energy minister Khalid al-Falih – who has a reputation for weighing his words carefully – chose to tweet about his recent meeting with Mukesh Ambani, the richest Indian tycoon. Ambani owns Reliance Industries Ltd (RIL), which manages the world’s largest refinery complex at a single site. Al-Falih said they had discussed “joint investment opportunities and cooperation in petrochemicals, refining and telecoms” in their two countries.

The seemingly innocuous tweet has ignited a storm of speculation. Al-Falih is a familiar name in India and is believed to be the brain behind the Saudi decision to invest in the proposed 60 MTPA mega refinery on the west coast in the state of Maharashtra. Aramco of Saudi Arabia has already committed to invest in the PSU-sponsored mega refinery along with ADNOC of UAE. So, what was the reason to explore opportunities in the refining business with the Reliance boss? The buzz in industry is that Al-Falih’s tweet is a sign that Saudi Arabia is increasingly exasperated by the delay in finding a location for the mega refinery. The Government of Maharashtra has abandoned the process of acquiring land for the refinery at Ratnagiri district, the originally proposed location, following stormy protests by the farmers. The process cannot be revived at least until the general election, which is scheduled for mid-2019, is over. Even if the BJP-led alliance is voted back to power in the state, there is no guarantee that its hostile coalition partner, the Shiv Sena, will support the refinery project.

The Saudis are not accustomed to India’s tortuous process of obtaining permits and the tardy execution of projects. The problems with land acquisition for showcase projects have magnified after the farmers’ agitation of 2007 at Singur in the state of West Bengal against land acquisition for Ratan Tata’s dream project for the Nano. Political parties and their leaders do not want to ruin their political fortunes by forcibly acquiring land from the farmers.

Mukesh AmbaniThere is a perception within the section of the industry that the logjam over land acquisition for the refinery project would not have arisen if Indian Oil Corporation (IOC) been allowed to have its way in setting up the refinery project as per the original proposal. IOC was supposed to be the leader of the mega refinery with a 50 per cent stake with the remaining stake to be shared equally between BPCL and HPCL.

Saudi Aramco entered the scene at the instance of India’s political leadership. Saudi Aramco was given a 50 per cent stake in the refinery. It later roped in ADNOC and parted with half the equity stake that it had been granted in the project. India welcomed the move as it had very friendly relations with the UAE.

The Modi government’s enthusiasm for foreign investment, particularly from a country like Saudi Arabia which so far shied away from investing in India, meant that IOC was inadvertently cut to size. Being a public sector company, it had to fall in line. IOC is not known to be comfortable in a setup where it is not the leader. It is an acknowledged fact that IOC enjoys tremendous clout at every level in the country and has a way of managing things without precipitating a crisis. Does this mean that IOC hasn’t been totally involved in the mega refinery project after the induction of foreign partners? There is no documentary evidence to substantiate such a view. There could be others in the country who empathise with IOC’s plight.

Sanjiv SinghBut the frustration that one senses in Al-Falih’s tweet does not presage that Saudi Aramco is ready to drop out of the mega refinery project. It will certainly wait for some more time. But the tweet is a warning to the Indian leadership that it is running out of patience. Saudi Aramco initially talked about entering the fuel retailing market in India. It is keen on marketing rights which need not be for retailing transportation fuels such as petrol and diesel. It may be interested in marketing select products like LPG. But the stalemate over the refinery project has created some uncertainty over the marketing plan as well.

It is unlikely that RIL will opt for a joint venture refinery with Saudi Aramco in India. If RIL is interested in enhancing the capacity of its refineries at Jamnagar on the west coast, it can do so very well on its own. Not many in the petroleum sector know that the leadership of Saudi Arabia has very friendly relations with Mukesh Ambani. His views may have been sought on possible investments that the Kingdom intends to make in India. However, personal relations do not stand in the way of business deals. Mukesh Ambani’s RIL buys crude oil from the cheapest possible sources.

Saudi Arabia is now scouting for markets for their crude oil as well as petroleum products. The OECD market for crude oil is crumbling because of declining demand and the increase in global crude oil supplies, especially from the US. China and India are the two dominant markets. A tie-up with a major refiner like Reliance makes a lot of sense for Saudi Arabia. The talks may not revolve around a joint venture. RIL could jump at a bait that promises a lucrative crude oil supply deal with the Saudis.



To download the latest issue 'Volume 26 Issue 1 - April 10, 2019', click here
Petro Intelligence [FREE Access]
Clear-Headed Regulation Required; Policy Tinkering Will Not Work
more...

ONGC Resists Niti Aayog, Regains Its Mojo
more...

The Great Indian Rip-off
more...

US Sanctions Cast A Cloud On Chennai Petroleum’s Expansion Plans
more...

Foreign Investment
Oilex Hopes To Resolve Cambay Dispute With GSPC
more...

Overseas Investment
Sri Lanka Plans $4 Billion Refinery At Hambantota
more...

Gas Scene
Increasing Dependence of Imported RLNG
more...


Russian Company Gazprom’s Average Gas Production Cost
more...


Natural Gas Price: Global / India
more...


India’s Sectoral Consumption of Natural Gas (FY 2018, FY 2023 & FY 2030)
more...


CFSR Study Report - Seamless Development of Gas Value Chain
more...


Potential LNG and FLNG Projects Aiming for FID in 2019-2020
more...


Domestic Natural Gas Scene in February 2019
more...


Advantage of strong Regulatory Environment for CGD Industry
more...


Domestic, Global Natural Gas Price Trends
more...


Market Natural Gas and CGD: Attractive Industry
more...


Adani Gas: Infrastructure Development to Propel Gas Demand India
more...


Update: Coal Bed Methane (CBM) Gas Development In India
more...


LPG Business Continues Its Robust Saga
more...


Capacity Utilization of Gas Pipelines
more...


Update: PNG Connections
more...


LNG Import Projection By Industry Group
more...


Status Of Gas Pipelines Under Construction
more...


Trends In Domestic Natural Gas Price & International Bench Marks
more...


Capacity Utilization of LNG Regasification Terminals
more...

Data Section
Monthly Upstream Data
Monthly Downstream Data
Historical database
Data Archives
Special Database
World Oil Demand 2018 & 2019
more...


Global Drilling Rig Count Drops in February 2019
more...


Growth In Sales Of Passenger Vehicles, Two Wheelers drops
more...


Indian Rig Count vs. Indian Basket Crude Price
more...


Price of Crude in the Indian Basket processed in Indian Refineries up to March 2019
more...


Price build-up of PDS kerosene at Mumbai and Element-wise explanation
more...


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


Power Supply Position Improves In February 2019
more...


Share of High Sulphur Crude Down In February 2019, Up In April-February
more...


Petroleum Products Import Up In February 2019, Petcoke Dominates.
more...


Crude Oil Imports Down In February 2019, OPEC Share Drops
more...


Global Rig Count Vs Crude Prices
more...


Solar Power Generation Growth Likely To Outweigh Other Sources By 2022
more...


Area-wise and Total Estimate of Renewable Energy Potential
more...


Domestic Oil & Gas Production vis-ŕ-vis Overseas Production in January 2019
more...


Petroleum Products Import Declines in January 2019
more...


Crude Oil Imports Dip In January 2019
more...


GRMs Of Indian Refineries During April-December 2018
more...


Ownership Pattern of Major Oil and Gas Companies
more...


State-Wise Balance Recoverable Crude Oil Reserves
more...


Merger & Acquisitions In The Indian Oil And Gas Sector
more...


Company-wise Length & Capacity of Product and Crude Pipelines in India
more...

Tenders [FREE Access]
Cairn Oil and Gas
more...


ONGC
more...