Based on the agreement, Aramco and Abu Dhabi National Oil Company were to hold a 50 per cent stake in Ratnagiri Refinery and Petrochemicals (RRPCL). The two West Asian companies
have so far not picked up equity in the company.
The oil-to-chemicals division of RIL
comprises refining, petrochemicals, and fuel marketing businesses.
The uncertainty over RRPCL is coming at a time when there are plans to shift it to Raigad, from the initial location of Ratnagiri. Initially, the project was expected to be commissioned by 2025, according to an understanding between OMCs and the foreign majors.
“It is upon Saudi Aramco to talk about the tie-up with RIL.
According to my information, work on the project is progressing. Talks are also about the shifting the project to an alternative location, but nothing has been finalised,” said B Ashok, chief executive officer, RRPCL.
There were also talks about bringing down the size of the refinery from 60 million tonnes due to cost escalation. Compared to the initial cost of $44 billion, the project was reportedly pegged at $60 billion recently.
is part of our efforts to advance our global downstream strategy. India is a large country with growing demand. What has been announced today (August 12) is a letter of intent. This is still an early stage of the engagement,” said Khalid H Al-Dabbagh, chief financial officer and senior vice-president of Saudi Aramco, addressing a conference call on Monday. He added that the current letter of intent will help the company in doing due diligence and proper evaluation of the deal, which is yet to be approved by its board.
“Globally, most of the new downstream expansions are coming in Asia (driven by China and also India). Hence, there is interest from major producers like Aramco. Specifically for India, with RIL further expanding capacity, the specifics of West Coast refinery would need to be carefully assessed,” said Anirban Mukherjee, partner and director, Boston Consulting Group.
The Ratnagiri project was put on hold after protests from locals. It was one of the contentious issue in the electoral tie-up between Shiv Sena and the Bharatiya Janata Party. Ashok added that at present there are no plans to bring down the size of the refinery.
The RIL announcement came on a day Saudi Aramco announced for the first time its half-year financial results. The company said it will leverage its strength in upstream, to deliver on downstream growth strategy, including acquisitions in both Saudi Arabia and key international markets. “These acquisitions are expected to enhance dedicated crude oil placement, increase refining and chemicals capacity, capture value from integration, and diversify our operations,” Saudi Aramco said in a post-result statement.
After taking charge of the petroleum ministry during his second term, Petroleum Minister Dharmendra Pradhan had spoken to his counterpart Minister of Energy Khalid Al-Falih regarding the future of Saudi’s investments in West Coast refinery and also possible tie-ups with RIL.