Saudi oil minister agrees to raise crude supply to 40m tpy from 25.5m tpy.
Saudi Arabia, the biggest oil exporter, agreed to almost double crude shipments to India and study “enhancement” of joint projects as Asia’s third largest economy seeks to increase supply for planned refineries.
Ali al Naimi, oil minister in the biggest Arab economy, agreed to raise crude supply to India to 40 million tons a year, or about 770,000 barrels a day, from 25.5 million tons a year, at a meeting today with counterpart Murli Deora, India’s Oil Ministry said in a statement on its Web site.
Indian Prime Minister Manmohan Singh, on an official visit to Saudi Arabia, aims to secure greater crude supplies, cementing the kingdom’s role as the biggest crude supplier to India. Singh, the first Indian prime minister to visit Saudi Arabia in 28 years, also aims to bolster security ties.
In an emailed note, John Sfakianakis, chief economist at the Riyadh based Banque Saudi Fransi, said: “As India’s largest supplier of crude oil, Saudi Arabia is favorably positioned to benefit from burgeoning demand for energy in Asia’s third largest economy."
Al Naimi expressed in the meeting Saudi Arabia’s “desire and readiness for providing India with its present and future needs of oil,” according to the state run Saudi Press Agency.
Saudi Arabia, which has joint venture refinery projects in China, is seeking to strengthen its role as a supplier to Asia as demand from the US and Europe has slipped with the global financial crisis.
India is seeking to increase supply for three refinery projects at Paradip, Bhatinda and Bina, the ministry said. It will also seek to import more heavy crude oil from state producer Saudi Aramco, according to the statement.
The three new plants - Indian Oil Corp.’s Paradip refinery in eastern Orissa state, Hindustan Petroleum Corp.’s unit at Bhatinda in northern Punjab and Bharat Petroleum Corp.’s Bina plant in central Madhya Pradesh - will increase India’s refining capacity of 178 million tons a year by almost 20 percent by the end of 2012.
Increasing imports from Saudi Arabia would bring India’s crude intake from the Arabian Gulf country to about 866,000 barrels of oil a day.
Saudi Aramco is already exporting about 1 million barrels a day to China, more than to the US, Chief Executive Officer Khalid al Falih said Jan 28.
On average, the US imported 1.01 million barrels of crude a day from Saudi Arabia last year, according to Energy Information Administration data.
Saudi Arabia has increased exports to India sevenfold between 2000 and 2008 and now supplies nearly a quarter of the south Asian nation’s oil needs, said Saudi Fransi’s Sfankianakis.
Singh said he planned to discuss with King Abdullah ways to promote “greater stability and security in the region,” according to a Saudi newspaper interview cited by the Saudi Press Agency.
Singh, who arrived in Riyadh yesterday, said in the interview with the Saudi Gazette that Saudi Arabia and India were allies against the “scourge of extremism and terrorism that affects global peace and security.”
He may discuss Afghanistan with King Abdullah after Taliban militant attacks in central Kabul Feb. 26 killed 17 people, including nine Indians, Press Trust of India said.
Saudi Arabia is a traditional ally of India’s chief regional rival Pakistan, which is accused by Afghanistan of not doing enough to help combat the Taliban on their joint border.
Pakistan was one of only three countries along with Saudi Arabia and the UAE that recognized the Taliban regime, which was ousted by a US led coalition in 2001.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.