Raghuvir Srinivasan
Anil Sasi

New Delhi, Jan. 16

THE company that holds a quarter of the oil reserves in the world and accounts for 12 per cent of global production, Saudi Aramco, on Sunday made a strong pitch to be a crude oil supplier of choice to India.

Speaking at Petrotech 2005, the sixth international petroleum conference, Mr Abdallah S. Jum'ah, President and Chief Executive Officer, Saudi Aramco, said: "There are three factors that make Saudi Aramco the supplier of choice for the Indian market. First, our responsible long-term approach to managing our unmatched reserve base; second, the reliability of our petroleum production and distribution infrastructure; and finally, our commitment to mutually beneficial partnerships."

At the moment, Aramco supplies over 4,50,000 barrels per day of crude oil to India accounting for about a quarter of the country's imports. India's demand for oil is expected to double from present levels by the year 2030 and about 94 per cent of the demand will be met by imports, according to the International Energy Agency.

"Saudi Aramco stands ready and willing to provide that energy, reliably and responsibly, just as we have delivered petroleum to global markets for nearly 70 years," said Mr Jum'ah, adding, "I consider ourselves as the backyard storage of India."

Keen to invest

Aramco said it is keen to invest in the Indian oil refining and marketing sector. The company has invited Indian companies to participate in the 4,00,000-barrels per day export refinery it plans to set up in Saudi Arabia.

"We have been seeking partnership in refining and downstream marketing in India for many years. We were about to put bids for Hindustan Petroleum Corp Ltd (HPCL) but it (privatisation) did not happen. We continue to look for opportunities and are talking to companies," Mr Jum'ah told reporters.

Saudi Aramco, which walked out of Indian Oil Corporation's nine-million tonnes Paradip refinery in Orissa, was one of the short-listed bidders for privatisation of HPCL, but the Government had abandoned the process just when the interested companies were doing their due diligence. Mr Jum'ah did not say if Saudi Arabia was willing to sell crude oil to India on long-term contracts instead of the present one-year term. "These (one-year contracts) are evergreen contracts and we will renew them."

Mr Jum'ah pointed to the acquisition of equity interest by Aramco in Showa Shell of Japan last year as an example of how his company was willing to wait for the right time to forge partnerships.

"The example of Japan is an important one when it comes to assessing and analysing Saudi Aramco's intentions in India. There are win-win opportunities present in India and ultimately these mutually beneficial partnerships will be realised," he said.

Aramco sits on 260 billion barrels of crude reserves (present global demand is approximately 80 million barrels per day) and is "working hard" to add newer ones.

Mr Jum'ah said that he expected to add another 200 billion barrels to the existing reserves. Interestingly, more than half of Saudi Arabia's potential hydrocarbon bearing areas are still unexplored, according to him.

In what should be comforting for the world oil market, he said that Saudi Arabia could now produce 11 million barrels of oil daily and easily sustain that production level for the next five decades. While this includes more than 1.5 million barrels of spare capacity, the kingdom is working towards bossing its capacity to 12 million barrels a day and eventually to even 15 million barrels in the long-term, if the need arises.

(This article was published in the Business Line print edition dated January 17, 2005)
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