India wants Saudi Aramco to develop strategic petroleum reserve as ties strengthen

Grand Gulf Energy

11/10/2023 10:13

By Sarita Chaganti Singh and Nidhi Verma
       NEW DELHI, Oct 11 (Reuters) - India wants Saudi Arabia's
Aramco to participate in its planned 6.5 million metric tons
(MMT) strategic petroleum reserve (SPR) programme as the South
Asian nation wants to strengthen ties with its key oil supplier,
according to a document seen by Reuters.
    The two nations have been talking about Aramco's
participation in the SPR programme for years. The talks,
however, gained traction after Crown Prince Mohammed Bin
Salman's meeting with Prime Minister Narendra Modi last month.
    "Under Phase II Strategic Petroleum Reserves Programme
construction of two new commercial-cum-strategic petroleum
reserves of 6.5 MMT have been approved," the Indian government
said in an internal document, adding that "Saudi Arabia's Aramco
can be invited to participate in the Phase II."
    Aramco declined to comment, while the Saudi government did
not respond to emails seeking comment. 
    India's prime ministers office, oil ministry and finance
ministry did not respond either.
    In 2021, India overhauled its SPR policy allowing commercial
sale of the crude to boost private participation in the building
of new storage facilities, mirroring a model adopted by
countries such as Japan and South Korea.
    India, the world's third-biggest oil importer and consumer,
imports over 80% of its oil needs and has built strategic
storage at three locations in southern India to store over 5
million tons of oil to protect against supply disruption.
    Abu Dhabi National Oil Co (ADNOC) has leased 750,000 tons of
oil storage in the 1.5 million ton SPR in the southern city of
Mangaluru.
    India has conducted two road shows for the second phase of
its SPR programme that received interest from companies
including Trafigura, British Petroleum  BP.L , Petrochina
 601857.SS , Hyundai, Gulf Energy  GULF.BK , Glencore and Shell
 SHEL.L , a government statement said.
    Regarding a potential deal between India and Saudi Aramco
 2222.SE , KPMG Partner Anish De commented: "Getting the
investment there will align the economic and political interest.
There is good economic and political reasons for the two
countries to do it."
    During the visit by the crown prince to India, Saudi Arabia
announced plans for an investment facilitation office in India's
Gujarat International Finance Tec-City, a tax-neutral financial
service centre. 
    India is also scouting for land to build a 1.2 million
metric tonnes per year refinery and petrochemical project in
western India with participation of Saudi Aramco and ADNOC.
    The two governments will form a task force to remove hurdles
like land acquisition, which has delayed the project, which was 
conceived in 2018. Saudi Arabia has committed $50 billion
investment for the project.
    

 (Reporting by Sarita Chaganti Singh & Nidhi Verma; Writing by
Aftab Ahmed; Editing by Simon Cameron-Moore)
 ((Aftab.Ahmed@thomsonreuters.com; +91 99109 33884;))