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India wants Aramco to develop petroleum reserve  

After the voluntary oil cut, Saudi Arabia's output for October, November, and December will be capped at nearly nine million bpd Reuters
Aramco has been selling crude oil to Vietnam, but has yet to make any investment in the country

India wants Saudi Aramco to participate in its planned 6.5 million metric tonnes strategic petroleum reserve (SPR) programme as the South Asian nation aims to strengthen ties with its key oil supplier, according to a document seen by Reuters.

The two nations have been talking about Aramco’s participation in the SPR programme for years. The talks, however, gained traction after Crown Prince Mohammed bin Salman’s meeting with India’s prime minister Narendra Modi last month.

“Under phase II strategic petroleum reserves programme construction of two new commercial-cum-strategic petroleum reserves of 6.5 million metric tonnes have been approved,” the Indian government said in an internal document, adding that “Aramco can be invited to participate in the phase II.”

Aramco declined to comment, while the Saudi government did not respond to emails seeking comment.

India’s prime minister’s office, oil ministry and finance ministry did not respond either.

In 2021, India overhauled its SPR policy allowing commercial sale of the crude to boost private participation in the building of new storage facilities, mirroring a model adopted by countries such as Japan and South Korea.

India, the world’s third-biggest oil importer and consumer, imports more than 80% of its oil needs and has built strategic storage at three locations in southern India to store over 5 million tons of oil to protect against supply disruption.

Abu Dhabi National Oil Company (Adnoc) has leased 750,000 tonnes of oil storage in the 1.5 million tonnes SPR in the southern city of Mangaluru.

India has conducted two road shows for the second phase of its SPR programme that received interest from companies including Trafigura, British Petroleum, Petrochina, Hyundai, Gulf Energy, Glencore and Shell, a government statement said.

Regarding a potential deal between India and Saudi Aramco, Anish De, a partner at KPMG, said: “Getting the investment there will align the economic and political interest. There is good economic and political reasons for the two countries to do it.”

During the visit by the crown prince to India, Saudi Arabia announced plans for an investment facilitation office in India’s Gujarat International Finance Tec-City, a tax-neutral financial service centre.

India is also scouting for land to build a refinery and petrochemical project in western India, expected to produce 1.2 million metric tonnes per year, with participation of Saudi Aramco and Adnoc.

The two governments will form a task force to remove hurdles such as land acquisition, that have delayed the project, which was conceived in 2018. Saudi Arabia has committed $50 billion investment for the project.