India offers to have a big deal with Saudi Arabia

India offers to have a big deal with Saudi Arabia

India is seeking a reasonable price for crude oil from Saudi Arabia, Oil Minister Dharmendra Pradhan said on Friday, in a move that could help Riyadh regain top spot in supplying the world’s third largest oil consumer.

India has sought reasonable oil prices for its refiners from Saudi Arabia which should also not hurt the interest of one of the world’s largest oil producing companies, petroleum minister Dharmendra Pradhan said. India has built a strategic reserve capacity of 5.3 million tonne across three locations – Vishakhapatnam (1.33 million tonne), Mangaluru (1.5 million tonne) and Padur (2.5 million tonne) – at a cost of Rs 4,098 crore. 

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More reserves will be added in the coming years and a Cabinet approval will be sought within 6 months, Pradhan said after meeting his Saudi Arabian counterpart Khalid al-Falih who has been here with a delegation since Thursday for a two-day tour. The development comes close on the heels of India signing a business agreement with Abu Dhabi National Oil Company to fill the Mangaluru reserve for which the oil company will be making capital investment.

India at present stores – including private and public firms – crude oil, petroleum products and gas to last for 63 days. Saudi Arabia’s Falih said oil markets are rebalancing and inventories are expected to continue declining this year “The oil markets, it’s clear, are rebalancing. This is a period of soft demand as we all know because of seasonality. Refineries are undergoing maintenance as well as low consumer demand but the data speaks for itself.

Many agencies have documented the decline in inventories and I think that’ll continue in 2018,” Falih said. He added that markets may stabilise. Apart from the ministerial level meeting, Falih also met an Indian delegation which included top executives of various state-owned companies including ONGC, Indian Oil Corp, Hindustan Petroleum Corp, among others, apart from representatives from India’s ministry of petroleum and natural gas. The meeting was also attended by the representatives from Saudi Aramco.