Oil company signs $44 bn deal for Indian refinery complex

Saudi Aramco, the worlds biggest oil company, on Wednesday announced a $44-billion deal to build a giant refinery complex in India with three Indian firms.

The refinery at Ratnagiri on the west coast will be handle up to 1.2 million barrels of oil a day, the Saudi company said in a statement after signing a memorandum of understanding with Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation.

The Ratnagiri complex "will rank among the largest world refining and petrochemicals projects and will be designed to meet India's fast-growing fuels and petrochemicals demand. The project cost is estimated at around $44 billion."

Saudi Arabia is the world's second biggest oil producer behind Russia, according to the International Energy Agency, while Aramco is the biggest company putting oil on the world market currently awash with product.

India priority

"Investing in India is a key part of our company’s global downstream strategy, and another milestone in our growing relationship with India," said Saudi Aramco president Amin Nasser.

"The signing marks a significant development in India's oil and gas sector, enabling a strategic joint venture and investment partnership that will serve India's fast-growing demand for transportation fuels and chemical products.

"Participating in this mega project will allow Saudi Aramco to go beyond our crude oil supplier role to a fully integrated position that may help usher in other areas of collaboration, such as refining, marketing, and petrochemicals for India's future energy demands," said Nasser.

Indian Oil, Bharat Petroleum and Hindustan Petroleum have set up a joint venture for the deal with Aramco, Ratnagiri Refinery and Petrochemicals Ltd.

Aramco said it may "seek to include a strategic partner to co-invest in the mega refinery".

Aramco and French firm Total this week announced a $5 billion deal to build a refinery at Jubail in Saudi Arabia.

Last month the Saudi firm awarded more than $8 billion worth of contracts to US firms to boost its US refinery operations.

Aramco has also pledged billions of dollars for deals in Malaysia and Indonesia in the past year.

The hotly-awaited stock market debut of the Saudi energy giant will be launched in 2018 or 2019, depending on the market, the kingdom's finance minister told AFP on Tuesday.

"If the market is ready in 2018, we will go in 2018. If not, we will wait until 2019," Mohammed al-Jadaan said of the giant initial public offering.

"We are not desperate for listing. We will only list when the market is right," he said.

The Aramco chief said last month that the company was on track for a 2018 listing, but that the date and venue would be decided by the company's state owner.

Jadaan said the government had not yet decided whether to list Aramco on the Saudi exchange alone, on a stock market abroad or seek a dual listing.

Saudi authorities plan to list five percent of Aramco but the company has struggled to arrive at the $2 trillion valuation sought by Saudi Crown Prince Mohammed bin Salman.