India courts Saudi Arabia for oil

India on Thursday made a strong pitch to channelise investments into its oil and gas sector from Saudi Arabia, which apart from private giants, has a sovereign wealth fund of over $600 billion (Rs 30 lakh crore). HT reports. Diplomacy running on oiled wheels

India on Thursday made a strong pitch to channelise investments into its oil and gas sector from Saudi Arabia, which apart from private giants, has a sovereign wealth fund of over $600 billion (Rs 30 lakh crore).

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India has also sought an additional 5 million tonnes of crude oil supply from Saudi Arabia starting next fiscal (2012-13), a move that would replace at least 10% crude oil being currently imported from Iran.

Saudi Arabia is the world’s biggest oil producer as also the biggest oil supplier to India and is supplying 27 million tonnes of crude oil every year to India. However, the foreign direct investment (FDI) inflows from this oil and cash rich nation is a miniscule $159 million, which is less than 0.02% of total FDI flows of more than $100 billion into India.

During bilateral discussions with the visiting Prince of Saudi Arabia, Abdul Aziz Bin Salman Bin Abdulaziz, who is also the assistant minister for petroleum affairs and petroleum and natural gas minister Jaipal Reddy, India invited Saudi participation in upcoming investment opportunities in its petroleum upstream and downstream sector. This included offers to participate in ONGC’s petrochemical project at Dahej and Mangalore. A statement from the petroleum ministry said that an offer has been made to the Saudi side for considering equity participation in these projects as a strategic investor.

The petroleum ministry also said, “other proposed investment opportunities such as IOC’s LNG project at Ennore, BPCL’s LNG terminal at Kochi, HPCL’s grass-root refinery in Vizag and IOC’s petrochemical plant at Paradip were also discussed for joint participation.”

The Saudi Prince said his country has a spare production capacity of 2.5 million barrels per day beyond current output of 9.8 million barrels a day. India also sought more LPG from Saudi Arabia to meet growing energy needs.

“We’ve demonstrated to our friends that the market is well supplied. There is no need to be concerned. We have demonstrated to our friends here today how much excess capacity there is today and how much excess capacity there will be in future,” Abdulaziz said.