Petroleum minister Dharmendra Pradhan has said the government is open to Saudi oil giant Aramco’s interest to own majority stake in the proposed Rs 3-trillion refinery at Ratnagiri, which when completed will be the largest single location refinery complex in the world with a capacity of 60 million tonne.
Saudi Aramco has reportedly sought majority ownership in the mega refinery-cum-petrochemical complex for which state-owned oil firms Indian Oil, Bharat Petroleum and Hindustan Petroleum have inked an agreement. “Aramco is in discussions with us. We have held many rounds of talks on the Ratnagiri project with them. It’s a commercial project and we are open to their suggestion (of giving majority stake),” Pradhan told media.
The minister was responding to a question on whether the world’s largest oil company that is working on a USD 1-trillion initial public float this year, has really sought majority stake in the project. Some media reports had last month said the Saudis were interested in the USD 40-billion project provided India was ready to offer majority control and that the facility will mostly use Saudi crude. When specifically asked whether the government was ready to offer majority stake in the project, Pradhan said “yes”, though did not quantify their demand.
“Yes it’s a commercial project and the ownership is still open,” said the minister.
IOC currently owns a 50 per cent stake in the project, with the remainder is equally split between BPCL and HPCL. When asked about the status of the Ratnagiri refinery, especially land procurement in the face of stiff opposition from the public as well as the ruling BJP ally Shiv Sena, Pradhan said, “I am optimistic that everything can be resolved through discussions. Every issue can be discussed and resolved with talks. Let’s see.” Once all the clearances are in, it will at least five to six years for the refinery to commence production. The refinery will include three crude units of 20 million tonnes each and will produce petrol, diesel, LPG, aviation turbine fuel (ATF) and feedstock for making petrochemicals such as plastics, chemicals and textiles.
While the project will give IOC a strong foothold in the western states as catering to customers in the west and the south is difficult with its refineries located mostly in the north, for HPCL and BPCL this will increase their capacity as their Mumbai refineries cannot be expanded further. Currently the country has a refining capacity of a little over 232 million tonne, against the domestic demand of 194.2 million tonne in fiscal 2017. According to the International Energy Agency, this demand is expected to reach 458 million tonne by 2040. The country is the world’s third-biggest oil importer.
IOC has 11 refineries with a capacity of 81.2 million tonne, while BPCL runs four with a capacity of 33.4 million tonne and HPCL operates three refineries with a capacity of 24.8 million tonne. Saudi’s interest in the project can be seen as securing its future with a large customer as increasing India has been moving away from Saudi to other markets like Africa, Latin America and even the US. Also, in the first week of March, Iraq overtook Saudi by a wide margin to become India’s top crude supplier, meeting over a fifth of the oil needs. Saudi, has traditionally been the top oil source for India, but in the April-January period of 2017-18, Iraq shipped 38.9 million tonne, which is more than 20 per cent of the annul imports.