Policy
MoPNG For New Strategy To Attract Foreign E&P Companies
more...


India Prefers Producing Assets Overseas To Exploration Blocks
more...


Russian Geologists Can Guide India To New Oil & Gas Discoveries
more...


Uncertain Future For Petrol And Diesel Vehicles
more...


Undoing ONGC- HPCL Merger Without Loss Of Face
more...

Regulation
Indian Refineries’ Changing Complexity Index
more...


Drop In LPG Consumption Surprises Petroleum Industry Watchers
more...


Indian PSUs Unlucky With Heavy Oil Sources
more...


Status Of Shale Gas And Oil Development In India
more...

Alternative Energy / Fuel
OIL Invites Bidders For 100 MW Of Solar Projects
more...


Total, EDF Renewables To Launch 700 MW Solar Power Projects In India
more...

New Projects
Shelf Drilling Awarded Two New Contracts
more...


IOCL Lays 3.1 Km-Long Petroleum Pipeline Beneath The Godavari
more...

Market Watch
PLL-IGL-GSPC To Set-Up LNG Pumps On Delhi-Mumbai Highway
more...

Companies
Shelf Drilling Ltd
more...


MRPL Q1 Loss At ₹5 Billion
more...


Gulf Oil India PAT Grows 21.4%
more...


MyPetrolPump Raises $1.6 Mn In Seed Round
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 9 - August 10, 2019', click here
Petro Intelligence [FREE Access]
ONGC-HPCL: A Marriage On The Rocks?
more...

Brakes On One Merger; Now Break The Grand Plan
more...

Modi Govt Gets Ready To Step On The Gas
more...

Shift Threat Quells Protest Against Aramco’s Giant Refiner
more...

Foreign Investment
BP, Reliance JV To Set Up 5,500 Petrol Pumps
more...


Total Picks Up 50 Per Cent Stake In Dhamra LNG Terminal
more...


Petronas Not Interested In Stake In Bina Refinery
more...

Overseas Investment
SBI Seeks Bids For Videocon’s Overseas Oil, Gas Assets
more...

Gas Scene
Trends in Natural Gas Price: Global and Domestic (June 2019)
more...


Sector-wise Demand And Comsumption Of Natural Gas
more...


Domestic Natural Gas Scene In June 2019
more...


Demand & Fuel Mix For Indian Power Sector, Alternative Scenario’s For Gas Demand
more...


Plant Liquefaction Scope Complexity and Capital Investment Factor
more...


Coal Bed Methane (CBM) gas development in India
more...


LPG Market Profile In Brief As On April 1, 2019
more...


Domestic Natural Gas Price and Price Cap for Deepwater, High temp High Pressure Areas
more...


Capacity Utilization of LNG Regasfication Terminals in FY 2018-19
more...


BAU scenario: India’s CGD gas consumption projected to grow by 10%
more...


Global LNG Fleet
more...


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...

Data Section
Monthly Upstream Data
Monthly Downstream Data
Historical database
Data Archives
Special Database
Percentage share of High Sulphur (HS) & Low Sulphur (LS) crude oil processing
more...


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


Oil Demand Remains Sluggish
more...


Indian Rig Count vs. Indian Basket Crude Price - June 2019
more...


Indian Basket Crude oil price In July 2019
more...


Consumption Growth Of Petroleum Products
more...


Specific Energy Consumption (MBN Number) Of PSU Refineries
more...


Need to Tweak Renewable Energy Strategy
more...


An Update of Crude Oil Imports: Volume & Value
more...


Profit After Tax (PAT) of Indian oil companies
more...


Indian Refineries: Fuel & Loss in FY 2018-19
more...


Automobile Sales Continued In Reverse Gear In June 2019
more...


India Imports More Petroleum Products In June 2019
more...


Crude Oil Import Drops In June , Sharp Fall In OPEC Share
more...


Power deficit: Region-wise position for June 2019
more...


Status of blocks under OALP and DSF rounds (as on 1st April, 2019)
more...


Distillate Yield of PSU Refineries
more...


Strategic Importance of Strait Of Hormuz For Asian Crude oil Importers
more...


Basin-wise PEL & PML under Nomination Regime as on 1st December, 2018
more...


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


Shrinking NELP Blocks Under Operation
more...


Indian crude oil basket price in June 2019 (in $ per bbl)
more...


Major highlights of ONGC Videsh
more...


Cash Compensation by Govt. on LPG under DBTL (Rs/ 14.2 kg Cylinder)
more...


Planned Refinery Capacity Expansion
more...

Tenders [FREE Access]
ONGC
more...