Abu Dhabi — India expects to strike a deal in 2020 with Saudi Aramco to provide crude to its Strategic Petroleum Reserves as well as invest in the country's storage facilities, India's energy minister told S&P Global Platts.
"UAE has already invested in our strategic storage," Dharmendra Pradhan told Platts Tuesday at an oil industry conference in Abu Dhabi. "Aramco is going to do that. Very soon the deal will be clinched I hope in 2020."
Currently, only the UAE's state-owned Abu Dhabi National Oil Co. is a partner to India's strategic oil reserves program, which consists of three sites across the country--Visakhapatnam (1.33 million mt), Mangalore (1.5 million mt) and Padur (2.50 million mt) -- accounting for a combined capacity of 5.33 million mt.
About 55% of the storage capacity is occupied, H.P.S. Ahuja, CEO and managing director of Indian Strategic Petroleum Reserves Ltd., told Platts in October, adding: "We are in talks with some Middle East producers for them to take the rest of the capacity."
Both storage and the crude contribution from Aramco are priorities for India, with quantities to be ironed out between both countries, Pradhan said.
"Hopefully in 2020 they will be filling our storage and they do commercial business. From that storage they can supply to our domestic refineries," he said.
Saudi Arabia is working on a closer relationship with India as part of an Asia focus for its crude supply, with Crown Prince Mohammed bin Salman visiting New Delhi in February. Saudi Arabia is India's second-largest crude source, accounting for 845,000 b/d -- or 18.5% -- of its oil imports over January-August, according to shipping data. Some 60% of India's oil needs are from the Middle East.
Gulf countries "are very reliable [suppliers]," Pradhan said. "We will continue to import from this area."
Aramco is engaged in other projects in India as part of Saudi Arabia's plans to cement its position in Asia's third-largest economy.
Aramco and state-owned ADNOC are collaborating for the first time to build a $60 billion greenfield refinery with an expected capacity of 1.2 million b/d that is likely to be built in the state of Maharastra. Start-up of the project and other details are being worked out, the minister said.
Aramco also has signed an agreement to buy a 20% stake in the oil-to-chemicals business of India's Reliance Industries for $15 billion. The agreement, which will add another 1.4 million b/d of refining capacity to the Saudi company's portfolio, is expected to be finalized by 2021, Aramco's senior vice president for downstream Abdulaziz al-Judaimi said in October.
Meanwhile, India is reducing its imports of Venezuelan crude, which is currently under US sanctions.
The oil imports from Venezuela are being reduced "day by day," Pradhan said.
"I am interested in diversifying my source of energy and geopolitics is not in my hand," he said. "We have to live with the reality" of US sanctions.
Venezuela boosted its crude production by 50,000 b/d to 650,000 b/d in October, helped by repairs to its Port of Jose Terminal, according to the latest S&P Global Platts OPEC survey.
India will continue to diversify its imports of oil and gas, Pradhan said. "India is a very price sensitive country."
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