NEW DELHI (Reuters) – India is set to grant Saudi Aramco a 50 percent stake in a planned 1.2 million barrels per day west coast refinery, said an industry source privy to the deal, in a move that would give the kingdom a new stable outlet for its oil.
A deal could be announced as early as Wednesday during Saudi oil minister Khalid Al-Falih’s visit to New Delhi to attend the International Energy Forum, a source, who asked not to be identified due to the sensitivity of the talks, told Reuters.
Aramco, like other major oil producers, wants to tap rising demand growth and invest in the world’s third-biggest consumer. Last year it opened an office in Delhi. India has so far outlined plans to expand its refining capacity by 77 percent to about 8.8 million bpd by 2030.
“There are some last minute negotiations on small issues, but both countries are almost ready to announce a deal today,” the source told Reuters.
Aramco was not immediately reachable for comment.
Representatives of Aramco held a marathon meeting with their counterparts from Indian companies on Tuesday.
Indian companies – Indian Oil (IOC.NS), Hindustan Petroleum (HPCL.NS) and Bharat Petroleum (BPCL.NS) – have floated a joint-venture Ratnagiri Refinery & Petrochemicals (RRPL), to build the proposed refinery in the western state of Maharashtra.
B. Ashok, chief executive officer of RRPL, who attended the meeting declined to comment.
Aramco, the world’s biggest oil producer is moving to invest in refineries overseas to help lock in demand for its crude, and expand its market share ahead of an initial public offering next year.
During his previous visit to Delhi in February, Falih had said Saudi Arabia would also sign oil supply deals as part of the agreement to buy stakes in Indian refineries, a strategy the kingdom has adopted to expand its market share in Asia and fend off rivals.
Last year, Saudi Arabia pledged billions of dollars of investments in refinery projects in Indonesia and Malaysia which came with long-term oil crude supply deals.
The kingdom is competing with Iraq to be India’s top oil supplier, with Iraq having displaced it for the first time on an annual basis in 2017, data compiled by Reuters showed.
Reporting by Nidhi Verma, Promit Mukherjee and Florence Tan; Editing by Euan Rocha