Policy
OPEC To Regain Indian Market Share With Fresh US Sanctions Against Russia, Venezuela
more...


New Sanctions Threaten Russian Oil Sales To India
more...


Oil India Seeks Foreign Partners To Realise Its Ambitions
more...


Despite The “First Oil”: Deepwater Exploration Remains A Disappointing Experience For ONGC
more...


India’s LPG Import Dependency Set To Deepen In Coming Years
more...

Regulation
Regulator Acts To Ensure Jet Fuel Is Supplied In Airports Only Through Pipelines
more...


India’s Policy Strategies Prevent Wild Fluctuations In Natural Gas Prices
more...


Can A Reduced GST Rate Promote Sales Of Auto LPG Vehicles?
more...


Jet Fuel Consumption Surges To Pre-Pandemic Level
more...

Alternative Energy / Fuel
India’s Expanding Wind Energy Capacity
more...

New Projects
Narendra Modi Inaugurates IOC’s Haldia-Barauni Crude Oil Pipeline
more...


IndianOil’s MEG Project Inaugurated
more...

Market Watch
201 CNG Stations Across 17 States Opened
more...

Companies
Westfield Energy Resources Limited
more...


Servotech Secures Order Worth Rs 1.1 Billion From Indian Oil Corporation
more...


India’s KPIL Secures EPC Contract From Saudi Aramco
more...

Press Release [FREE Access]
Petro Intelligence » Kuwait Prefers A Distance From Saudi

by R. Sasankan

Saudi Arabia appears to have kicked off a big petro-dollar investment craze for large refinery and petrochemical projects in India. When petroleum minister Dharmendra Pradhan had first started to drum up investor interest in a big-ticket mega refinery project on India’s west coast, many had dismissed it as just another pie-in-the-sky dream. No one had really believed that he would be able to persuade Saudi Arabia to pick up a 50 per cent stake in the proposed 60 million tons per annum project. But when the Saudis interest was piqued and they decided to stump up the money, it surprised everyone in government and caused a stir in the refinery and petrochemical industry.

sabah al ahmad al jaber al sabahSaudi Arabia is going through a phase of radical reform – a time when it has started to quickly jettison stuffy, dyed-in-the-wool notions about governance, investment and socio-cultural practices and embrace out-of-the box ideas to shake up traditionalist thinking in the rich, oil kingdom. Saudi Arabia has become a hothouse of surprises in recent months. But an investment on such a massive scale had never been expected in a country that has never been on its investment radar. Clearly, there must have been long and deliberate deliberations on this proposal before they decided to commit the funds.

India has been buying crude from the Middle East countries for many years as the region had been geographically close to it. The leadership in India – dating back to the regime of Indira Gandhi – had tried but failed to attract big petro-dollar investments. The Middle Eastern oil-rich countries have always looked to the West for investment opportunities, a fervour that remains undiminished. But India has managed to chip away at the reservations that these countries had about investing in India, largely because of the fact that it has since emerged as one of the world’s fastest-growing economies and is currently the third largest importer of crude.

All this has been written about fairly extensively. But an innocuous question that was raised by an oil industry executive at an informal get-together in Delhi recently piqued my interest and forms the basis for this article. There have been a number of reports in the media suggesting that the UAE may also be eager to pump money into the west coast mega refinery project. The UAE has already signed a deal with India to fill up a part of the large crude storage tank at Mangalore in the state of Karnataka and has also roped in an Indian PSU as its equity partner in a major oilfield that it plans to develop. The question was about Kuwait. Would it also be keen to join the mega refinery since it also has been scouting for investment opportunities in India’s refinery sector?

Mohammad Bin SalmanI decided to bounce this question off to a few oil industry experts who know the Middle East well. My understanding about these three countries was superficially right: all the three Middle Eastern nations are very friendly with the US and opposed to Iran. In the Middle East, the perception is that it is Saudi Arabia that is fighting Iran, a Shia country, and, therefore, Kuwait should not have any problem in joining the mega refinery project as an investor. But that assessment is based on an insufficient understanding of the reality in the Middle East. Soon after Saudi Arabia decided to invest in the mega refinery, Kuwait started scouting for refinery projects in India where they could invest. It was not looking for new refinery projects but actually scoping out opportunities in existing PSU refineries. It had almost zeroed in on the Bina refinery project which is a joint venture between the stated-owned BPCL and Oman Oil Company.

The reason is simple: Kuwait is different, and the Kuwaitis consider themselves to be superior to the Saudis. Such cultural differences exist in many parts of the world: the Swedes consider themselves to be superior to the Finns, and the French have a similar perception about the English. But the differences between the Saudis and the Kuwaitis run a lot deeper. These experts believe that Kuwait isn’t close to Saudi Arabia at all. They have never opted to collaborate while investing large sums of money in any project across the world. “If Kuwaiti investment is of the same order as the Saudis, then Kuwait will want control. And that will simply not be acceptable optically to the Saudis. The Saudis see themselves as the undisputed leaders of the Gulf nations which will not be acceptable to the Kuwaitis,” said an acknowledged expert on the Middle East.

This ought not to be a matter of great concern for Indian authorities. In fact, such differences actually work in India’s favour. Saudi Arabia has very ambitious investment plans for India and the refinery project is just one of them. Kuwait will not allow itself to be left far behind the Saudis. However, it will not try to get into a game of one-upmanship with the Saudis.

Kuwait may decide to invest in the petrochemical sector as well. If the investment plan for the Bina refinery does not work out, Kuwait may turn to IOC’s Paradip refinery. In fact, Kuwait entered the Indian market 15 years ago and almost decided to invest in IOC’s Paradip refinery project. It had even signed an MoU with IOC. It later withdrew from the project following differences with the IOC management over the terms of investment.

India has now become a major investment destination for petroleum projects. Its growing economic clout has also strengthened its bargaining position vis-à-vis investors. The Indian government is also playing its cards well: it would like to attract investment from the Middle East but it has no intention of dabbling in the internal politics of the region. That is the best way to attract investments and avoid controversy.

 



To download the latest issue 'Volume 30 Issue 23 - March 10, 2024', click here
Petro Intelligence [FREE Access]
Calling The Bluff On India Busting Russian Sanctions
more...

MRPL: Asserting Its Bragging Rights
more...

Halving Of OMCs Budget And Unchanging Petrol And Diesel Prices: Are They Connected?
more...

Buy Assets In US And Swap Crude With Europe
more...

Foreign Investment
BluPine Energy Acquires 369 MW Solar Power Assets From Acme Group
more...


Malaysian Joint Venture Owned FPSO Extracts First Oil From ONGC’s KG Block
more...

Overseas Investment
Bangladesh To Launch Offshore Oil And Gas Bidding Round
more...

Gas Scene
Sector-wise Consumption Of Natural Gas
more...


Higher LNG Imports Elevate Natural Gas Consumption Level in January 2024
more...


Near Total LPG Penetration Achieved
more...


India’s Fluctuating Gas Import Dependency
more...


Gas Transportation Major GAIL’s Physical Performance
more...


Growing CGD Sales In India
more...


Domestic Natural Gas Scene In December: Targets Elude, Production, Consumption More
more...


India’s LNG Import: Import Quantity Shrinks As Prices Go Up
more...


India’s LNG Import Picks Up As Market Prices Fall
more...


Sectoral Consumption Of Natural Gas
more...


Production Targets Confuse Domestic Natural Gas Scene In November
more...


Shale Gas & Oil Eluding India
more...


Domestic Natural Gas Scene in October 2023
more...


Natural Gas Price Trends: Global And Domestic
more...


Sectoral Consumption Of Natural Gas In September 2023
more...

Data Section
Monthly Upstream Data
Monthly Downstream Data
Historical database
Data Archives
Special Database
Oil Marketing Company BPCL’s Refineries Performing Remarkably Well
more...


Oil India’s 3 Major Overseas Projects
more...


BPCL Finalises Strategic Aspirations For The Next Five Years
more...


Refining Margins In Global Hubs Show Mixed Trends
more...


Global Oil Demand Growth Forecast For 2024 Remains Unchanged
more...


Indian Crude Basket Prices In February 2024
more...


Petro chemical Sector Ensures Stability In Naphtha Demand Growth
more...


Banned Pet Coke In Great Demand in India
more...


India’s Ambitious Ethanol Blending With Petrol Program. New Confidence Visible
more...


When Will Kerosene Be Out of Indian Households?
more...


What Has Been The Consumption Trend of Petroleum Products During Current FY?
more...


Region wise Power Supplied vs requirement for January 2024
more...


Impressive Growth In Petroleum Products Consumption
more...


Exports, Imports Of Petroleum Products In January Maintain The Normal Growth Pattern
more...


Analysis of crude oil processed by Indian Refineries in January 2024
more...


Russia Retains 37% Share In India’s crude imports, OPEC Share Down Further
more...


Indian Crude Basket Prices In January 2024
more...


Consumption Growth In Diesel, Petrol, Jet Fuel, LPG
more...


Fuel & Loss In Indian Refineries
more...


ONGC’s Widening Collaboration With International Companies
more...


Oil India’s Expanding Domestic Assets
more...

Tenders [FREE Access]
PetronetLNG
more...