Coal News We love to talk!
India’s newest petrochemicals maker is seeking to sell half its $4.6 billion facility to Saudi Arabian Oil Co., according to people with knowledge of the matter.
Formal talks between ONGC Petro additions Ltd (OPaL). and the world’s biggest oil exporter, known as Saudi Aramco, will start soon, said the people, who asked not to be named as the information isn’t public. OPaL’s earlier talks with a unit of Kuwait Petroleum Corp. about investing in the project stalled last year, the people said.
A spokesman for OPaL was unable to comment. Saudi Aramco and Kuwait Petroleum didn’t immediately respond to requests for comment.
The investment could help Saudi Aramco strengthen its hand in the world’s largest oil consuming region as it prepares for what may be the biggest-ever initial public offering. India’s per capita consumption of polymer products, which is about a third of the global average, is expected to expand as a growing middle class, increasing income levels and higher urbanization drive growth, Prime Minister Narendra Modi said last month while inaugurating OPaL’s plant.
“India’s petrochemical business is booming and Aramco will definitely want to be a part of this growth,” said Vaibhav Chowdhry, an analyst at KR Choksey Shares & Securities Pvt. Ltd. The country’s petrochemical market is expected to grow as fast as 12% annually for next several years, he said.
Oil & Natural Gas Corp. (ONGC), which owns the biggest stake in OPaL, entered into a preliminary cooperation agreement in January 2014 with Petrochemical Industries Co., a subsidiary of state-owned Kuwait Petroleum. Talks between OPaL and PIC about the Kuwaiti company investing in the Indian project stalled last year, according to the people. OPaL hosted a team from Saudi Aramco at its plant in Gujarat last month, they said.
Higher demand for these products prompted billionaire Mukesh Ambani’s Reliance Industries Ltd and the nation’s biggest refiner Indian Oil Corp. to expand their petrochemicals businesses. Reliance invested about $19 billion to double the capacity of its petrochemicals unit, while Indian Oil will spend $4.6 billion to add new facilities and expand existing units.
Saudi Aramco, which is the biggest supplier of crude oil to India, has shown interest in a proposed 60 million tonnes-a-year refinery and petrochemicals project being planned by Indian state refiners on the nation’s west coast, oil minister Dharmendra Pradhan said on 30 March.
The Saudi oil major has already invested in integrated refining, chemicals, marketing and distribution companies in the region. Last month, it bought half of a Malaysian oil refinery and petrochemical plant and signed a deal to provide up to 70% of its crude requirements. Separately, the Saudi oil giant signed a $6 billion oil refinery deal with Indonesia’s PT Pertamina.
OPaL’s Rs30,000-crore petrochemical project is a dual-feed cracker with a capacity to produce 1.1 million tonnes a year of ethylene and 400,000 tonnes of propylene, according to its website. The plant, located at the Dahej Special Economic Zone, started production last year and aims to capture 13% of India’s polymer sector by next year, according to its website.
While investment in OPaL will allow Aramco to access India’s growing market, the Indian company will be able to use the Saudi company’s export channels to push products in the international market, two of the people said. ONGC has said it intends to hold 26%, with state utility GAIL India Ltd owning 15.5%, after half of OPaL is sold.
- India and KFW sign two 125 million euro loan agreements under Green Energy Projects programme Read more
- ONGCs PAT to take Rs 3,000 cr hit on falling gas price Read more
- Essar Oil's fuel exports to fall in 2018/19 as focus shifts to local sales Read more
- Mumbai Port Trust to set up Rs 4,000-cr LNG terminal Read more
- Two more petrol pumps raided in Thane, Maharashtra for tempered vending machines Read more
- FISME seeks restoration of incentive for wind energy projects Read more
- TMC slams govt for hiking PDS kerosene price Read more
- Banks, led by State Bank of India, keen to hive off LNG terminal from Dabhol Project Read more
- BPCL: FY14 may see fresh triggers from E&P Read more
- ONGC in talks for Gujarat State Petroleum Corp asset Read more