PM Modi may stopover in Riyadh to firm up oil deals

New Delhi, Sep 26, 2019-

Amid reports that Saudi Aramco is set to announce its IPO next month, which would be the world’s largest ever listing, India would be looking to expedite the $44 billion West Coast refinery project in Maharashtra, in which Saudi Aramco is to hold considerable stake, as well Reliance Industries Ltd $15 billion deal with the Saudi oil giant to sell 20 per cent stake in its flagship chemicals and refining business.

Despite the September 14 drone attack on the Abqaiq oil refinery and Khurais oil field, that knocked out half of Saudi Arabia’s total output and 5 per cent of global oil supply, Riyadh has assured India there will be no disruption in oil supplies.

Global majors Saudi Aramco and Abu Dhabi National Oil Company (Adnoc) had formed a joint venture with Indian state-run oil marketing companies – Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) – to hold 50 per cent stake in the Ratnagiri Refinery and Petrochemicals (RRPCL), known as the West Coast refinery project.

However, issues of land acquisition have held up progress of the project, which are likely to be sorted out.

In August, Reliance had announced its plans to sell 20 per cent stake to Aramco in its refining and petrochemicals business for $15 billion, as part of a plan to reduce its massive debt. According to the terms of the deal, Saudi Aramco will also supply 500,000 barrels per day of crude oil to RIL’s twin refineries in Jamnagar.

The two deals are likely to be firmed up soon, and likely at Prime Minister Narendra Modi’s personal intervention. He could make a brief stopover at Riyadh on his way back from the United Nations General Assembly to finalise the deals, which would be a big boost to India-Saudi ties.

Saudi Arabia is the second largest supplier of crude and liquefied petroleum gas (LPG) to India. In 2017-18, India’s crude oil imports from Saudi Arabia stood at 36.8 million tonnes, accounting for 16.7 per cent of its total imports.

India is also keen to not allow any let up in its ties with Saudi Arabia, which has had a longstanding and close relationship with Pakistan.

In fact, Pakistan Prime Minister Imran Khan made a two-day stopover at Riyadh on way to New York for the UNGA, and performed ‘Umrah’ at Mecca with his wife Bushra Bibi. He also discussed Kashmir with the Saudi Crown Prince Muhammad Bin Salman.

According to an interview by Pakistan Foreign Minister Shah Mahmood Qureshi, Imran Khan during his visit to the Kingdom apprised the Saudi authorities about the “Hindutva ideology that the Indian regime harbours” and that Prime Minister Modi has “deep-rooted RSS connections”.

In an interview to ARY News, Qureshi said that Pakistan’s relations with Saudi Arabia at present “are better than they were in the past”.

To drive home Pakistan’s continuing close ties with Saudi Arabia, Imran also flew to New York in Prince Salman’s special plane.

According to Pakistani media reports, the Crown Prince refused to let Imran Khan travel on a commercial flight.

“You are our special guest and you would be going to the U.S. on my special aircraft,” the Saudi Crown Prince is reported to have told the Pakistan Premier.

While Saudi Arabia has declined to comment on the Kashmir issue, saying it is for India and Pakistan to resolve it, the 57-member Organisation of Islamic Cooperation (OIC) countries on Wednesday passed a resolution on Kashmir.

The OIC contact group on Kashmir on the sidelines of the UNGA in a resolution asked India to reverse its decision of revoking special status of Jammu and Kashmir and allow “full and free access” to international bodies, including OIC and UN, to independently investigate reports of “gross and systematic human rights violations taking place there”.

Crown Prince Salman had visited Pakistan and India in back-to-back visits in February, just after the Pulwama terror attack when India-Pakistan tensions were at a high, and is known to have played a role in scaling down the tensions.

The government would be keen to take forward the West Coast refinery and petrochemical project in Maharashtra, which would be the largest greenfield refinery in the world, and the Reliance-Aramco deal, to keep up the tempo in bilateral relations.

During the Crown Prince’s visit to India, both sides had also discussed Saudi Arabia’s participation in the Indian Strategic Petroleum Reserve (SPR) Programme – three massive underground storage facilities that India is building to ensure energy security.

According to this, the government is to set up 5 million metric tons (MMT) of strategic crude oil storages at three locations, Visakhapatnam, Mangalore and Padur (near Udupi), which would be in addition to the existing storages of crude oil and petroleum products. The storage facilities would act as a cushion during any external supply disruptions.

Saudi Arabia would definitely be a valuable partner in India’s Strategic Petroleum Reserve Programme.

On Thursday, Modi will meet Iranian President Hassan Rouhani as he maintains a balance of power to safeguard India’s interests in the Middle East.  (Agency)

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