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Dr. Naser Al-Tamimi | Published — Wednesday 11 October 2017
Aramco: India is a priority, not a choice
India and Saudi Arabia are working on elevating their relationship to a new level as the Kingdom’s state-owned oil giant Saudi Aramco has “mega investment” plans in India’s energy sector.
Aramco is looking to create a fully integrated business in India and is interested in buying a stake in the world’s largest oil refinery planned for the west coast of India. “We intend to strengthen partnerships with Indian energy firms — beyond the supply of crude and LPG — and invest in refining, distribution, retail and petrochemicals,” Saudi Aramco President and CEO Amin H. Nasser said last week at the Indian Energy Forum by CERAWeek in New Delhi.
India is Saudi Arabia’s fourth-largest oil export market (after Japan, US, and China) and the Kingdom is struggling to maintain its position as the top oil supplier to its important Asian customer. Indeed, Aramco faces fierce competition from producers within the Organization of the Petroleum Exporting Countries (OPEC) to retain one of its most prized markets.
To be sure, Saudi Arabia has been usurped by Iraq as the top oil supplier to India since the start of 2017. Iraq’s exports to India have doubled since 2014 and Indian imports from Iraq averaged 852,862 barrels per day (bpd) for January-August 2017, against 768,652 bpd for Saudi Arabia, according to the latest data by Indian customs.
Aramco is interested in buying a stake in the planned a 60 million tons a year 1.2 million bpd) refinery in Maharashtra, India’s Oil Minister Dharmendra Pradhan said at CERAWeek. At the heart of Aramco’s investment strategy in Indian refineries is a desire to lock up markets for its oil exports, which was the same strategy that the company has pursued in its main markets such as the US, China and currently in Indonesia and Malaysia.
Acknowledging India's importance as one of the largest and fastest growing economies in the world, Aramco expressed its readiness to engage New Delhi and fulfil its oil requirements on a long-term basis. In this context, the inauguration of the new Aramco office in New Delhi this month signifies the company’s interest in securing its market share and expanding its presence in India. “India has all the signs of a prosperous economy that is on the move. This is a market of investment priority and not a choice any more,” Nasser said.
India could become the second-largest oil importer after China over the next two decades, so its crude imports from Saudi Arabia are likely to increase.
In broader economic terms, the Kingdom was the fourth-largest trade partner of India in 2016. However, the value of India-Saudi Arabia trade last year declined to $23.5 billion, a decrease of over 17.2 per cent from more than $28 billion in 2015, according to the International Monetary Fund. The decline can be attributed mainly to low oil prices.Dr. Naser Al-Tamimi
For Saudi Arabia, India was the third-largest market for its exports, accounting for over 10 percent of its global exports. In terms of imports by the Kingdom, India ranked sixth and was the source of more than 3.7 percent of the Kingdom total imports. However, Saudi Arabia's exports of oil and petrochemical products to India accounted for about two-thirds of the total trade between the two countries.
Indeed, cooperation in the energy sector is a driving force in Saudi-Indian ties. Saudi Arabia is the world’s largest oil exporter, whereas India has become the world’s third-largest oil consumer and importer. India imported 64.3 per cent (or 2.6 million bpd) of its oil from the Middle East and Saudi Arabia was India’s largest oil supplier in 2016, at 18.9 percent of oil imports (about 782,000 bpd).
Looking forward, India could become the second-largest oil importer (after China) over the next two decades. Consequently, crude oil imports from Saudi Arabia are expected to increase in the future. “By 2040, India is likely to be among the fastest growing oil markets, with demand almost doubling to about 10 million bpd,” Nasser said.
• Dr. Naser Al-Tamimi is a UK-based Middle East researcher, political analyst and commentator with interests in energy politics and Gulf-Asia relations. Al-Tamimi is author of the book “China-Saudi Arabia Relations, 1990-2012: Marriage of Convenience or Strategic Alliance?” He can be reached on e-mail: nasertamimi@hotmail.co.uk. Twitter: @nasertamimi
http://www.arabnews.com/node/1176286
Opinion: Why Saudi Aramco's New India Office Is Good News for Oil Prices
Published October 11th, 2017 - 20:00 GMT via SyndiGate.info
Saudi Aramco celebrated this week the opening of a new office in India. Here's why it's good news for oil markets. (File photo)
Saudi Aramco announced on Monday that it will reduce its November allocations to customers by about 500,000 bpd. This comes despite strong demand for Saudi oil, in excess of 7.711 million bpd. This is bullish news for oil prices. Saudi production will likely decrease in the month of November as well, because the Kingdom will not need as much oil for domestic electricity generations as it enters the cooler winter months.
Even though OPEC’s regular November meeting is still over a month away, the organization’s leaders are already sending signals that the production cuts will be rolled over into the second quarter of 2018. Saudi oil minister, Khalid al Falih, said on October 8 that he is, “satisfied with the progress” the production cut deal has made so far, but that, “we must keep our eyes on the road and keep holding the steering wheel.”
Mohammad Barkindo, OPEC’s Secretary General, was more blunt. He told reporters on Sunday that, “to sustain this into next year, some extraordinary measures may have to be taken.” It remains to be seen whether this means ending special exemptions from quotas for Libya and Nigeria, pushing Iraq to finally comply fully with its quotas, or, as some have suggested, inviting new oil producers to join in the deal.
So much talk about extending the production cut deal past March 2018, however, could leave OPEC in a difficult situation come November. The organization runs the risk of repeating what happened at the May 2018 meeting. By the time the May meeting arrived, OPEC had made it clear that the production cuts would continue into 2018. However, there were rumors that OPEC and its non-OPEC partners might agree to even deeper cuts, and when this did not pan out, oil prices dropped even though they announced that the OPEC-non-OPEC production cut deal would be continued.
So far, the oil market has reacted bullishly, but November is still a long way off.
By Ellen Wald
https://www.albawaba.com/business/o...new-india-office-good-news-oil-prices-1032752
