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Saudis to invest in Indian oil sector

Speaking just before the arrival of King Abdullah in India for R-Day, Oil Minister Ali Al Naimi spoke of 'interdependence'.

india Updated: Jan 25, 2006 01:45 IST

As it is already India's largest oil supplier, "it is logical for Saudi Arabia to invest in India's energy sector," said the desert kingdom's Oil Minister Ali Al Naimi.

Speaking just before the arrival of Saudi Arabia's King Abdullah on a state visit to India, the minister spoke of the "interdependence" that existed between the world's largest oil producer and Asia's third largest oil consumer.

Al Naimi said Saudi Arabia was interested in investing in upstream petroleum projects in India. His country, in return, welcomed Indian investment in gasfields in Saudi Arabia.

But the closed nature of India's oil and gas sector was a barrier for Saudi investment. "Your industry is still in the process of liberalising," he noted. Earlier attempts by Saudi Arabia to buy upstream petroleum assets in India had been stalled by politics.

In contrast to the Indian public sector firms, Saudi Arabia had found a more receptive business partner in Reliance. "Reliance is our best hope for a joint venture with Saudi Arabia," the minister said.

Saudi Arabia has helped built refineries for its crude in many of its key Asian customers including South Korea, Japan and China. It seeks a similar arrangement in India.

Saudi officials later said that their country was prepared to finance such refineries in India — an important offer because Indian public sector firms are reluctant to commit the billions needed to build such complexes.

However, the minister ruled out selling equity in Saudi oilfields to Indian firms. "Aramco is the world's biggest oil firm, it has the largest proven reserves and doesn't need a partner," Al Naimi said. But gasfields were open to Indian firms. But when such gasfields had been on the block in the past, the minister noted, Indian firms "did not bid."

The minister said Saudi Arabia was prepared to help Indian build up strategic petroleum reserves but only if it made "commercial sense."

First Published: Jan 25, 2006 01:45 IST