Partner: Saudi Arabia Energy Minister Khalid al-Falih says they regard India as a priority. Picture: REUTERS
Partner: Saudi Arabia Energy Minister Khalid al-Falih says they regard India as a priority. Picture: REUTERS

New Delhi — Saudi Aramco signed an initial deal with a consortium of Indian refiners on Wednesday to build a $44bn refinery and petrochemical project on India’s west coast, as the kingdom moves to secure buyers for its crude in a market awash with oil.

Top executives of Aramco and India’s Ratnagiri Refinery and Petrochemicals — a joint venture of Indian Oil, Hindustan Petroleum and Bharat Petroleum — signed a memorandum of understanding to take equal stakes in the project in Maharashtra state. The project includes a 1.2-million-barrels-per-day (bpd) refinery that is integrated with petrochemical facilities with a total capacity of 18-million tonnes per year, the officials said on the sidelines of the International Energy Forum.

Aramco, the world’s largest oil producer, is expanding its footprint globally by signing new downstream deals and boosting the capacity of its existing plants ahead of an initial public offering that is expected later in 2018 or in 2019.

Days earlier, state oil giant Aramco sealed refining and petrochemicals deals worth about $20bn in France as well as the US.

The Indian plant will be one of the world’s largest refining and petrochemical complexes, built to meet fast-growing fuel and petrochemicals demand in India and elsewhere.

"Large as this project may be, it does not by itself satisfy our desire to invest in India…. We see India as a priority for investments and for our crude supplies," Saudi Energy Minister Khalid al-Falih said. "We’re very much interested in retail," he said. "We want to be consumer facing."

Saudi Aramco will supply at least 50% of the crude to be processed at the planned refinery, he said. Aramco might introduce at a later stage a strategic partner to share its 50% stake, the minister said.

"We have somebody in mind and we will announce [the partner’s name] in due course," Aramco CEO Amir Nasser said.

Saudi petrochemical company Sabic is also keen to invest in a cracker and other facilities in India, Falih said.

Aramco, like other major producers, wants to tap rising demand growth and invest in the world’s third-biggest oil consumer. It opened an office in New Delhi in 2017.

India outlined plans in February to expand its refining capacity by 77% to about 8.8-million bpd by 2030.

Falih had said in February Saudi Arabia would sign oil supply deals as part of any agreements to buy stakes in Indian refineries, a strategy it has adopted to expand its market share in Asia. The company is further strengthening its refining role in China.