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Wild Predictions About Crude Oil Price Create Confusion
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Will Indian PSUs Get Blocks In ADNOC’s Second Exploration Round?
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India To Ramp Up Oil Imports From USA To Balance Trade
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Post-election Challenges For The Government In The Petroleum Sector
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Regulation
Power Sector Holds The Key To Enhancing Gas Consumption
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Mumbai Basement Plays Holds Tremendous Potential For ONGC
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Kerosene Production & Consumption Continue To Decline
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With INDMAX Unit, IOC’s Emerges As Technology Provider
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Alternative Energy / Fuel
Aemetis India Plant Wins $23 Million Biodiesel Supply Contract
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New Projects
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ONGC Gets Environmental Clearance For Rs 2.40 Billion Project In Assam
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Petronet Plans Mini LNG Terminal In Andaman
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Market Watch
GS Caltex Appoints Brand Ambassador
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Companies
John Energy Limited
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ONGC Reaffirms: Sufficient Funds To Meet Current And Future Capex Needs
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NRL Launches Food Grade Wax
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Press Release [FREE Access]
Petro Intelligence » Kuwait Petro: Left High And Dry
By R. Sasankan

Kuwait Petroleum Corporation (KPC), which had dithered on an investment in the Paradip refinery back in the nineties before eventually backing out, may now have good reason to rue its decision. Almost 25 years later, it is desperately scouting for an opportunity to shovel its money into a refinery project in India. But it is now awakening to a bitter truth: the state-owned refineries in India aren’t interested in its money. Most of these companies are flush with funds themselves and can meet the cost of their expansion projects out of their own resources.

This is the main reason why KPC has found itself stymied as it hunts for an opportunity to pick up an equity stake in an existing state-owned refinery. Kuwait Petroleum International (KPI), KPC’s overseas investment company, which at one stage zeroed in on Bharat Oman Refinery Ltd (BORL) as a suitable project, has given up hope of clinching a deal for the time being.

BORL is a joint venture between Bharat Petroleum Corporation Ltd (BPCL) and Oman Oil Company (OOC) in which the partners have equal stakes. But Oman Oil Company baulked at the idea of pumping in money when the refinery decided to expand capacity from 120,000 barrels per day to 156,000 bpd. As a result, BPCL may have to raise its stake in the refinery to 74 per cent. KPC has been eyeing the 26 per cent stake held by Oman Oil Company but the latter may not want to quit India at a time when Middle East companies are competing to grab market share in an increasingly attractive Indian market.

KPC’s Indian strategy is in disarray. Kuwait used to be one of the largest suppliers of crude oil to India right up to 1990s. Its share came down gradually and it now accounts for only 6 per cent of India’s crude oil import. Kuwait should never have been cast in the role of a laggard. It was the first Middle East company to propose an investment in a new refinery project at Paradip in Indian state of Odisha and even signed a MoU with promoter IOC to pick up 26 per cent stake.

It is still a mystery why KPC backed out of the project. Although neither side disclosed the real reason behind the collapse of the MoU, sources say both sides wrangled over marketing rights. The Paradip project languished for more than 15 years and was commissioned only in 2017. The episode left Indian PSUs with the impression that KPC was an unreliable partner – and that is why they have been cool to its overtures now.

KPC re-entered the Indian refinery scene last year after Saudi Aramco clinched the 60 million tonne per annum mega refinery deal. Aramco roped in Abu Dhabi National Oil Company (ADNOC) as a partner. KPC does not normally figure in Aramco’s scheme of things. KPC has not so far shown interest in any other area for investment in India even as ADNOC is going ahead with its plans to fill India’s crude storage caverns and has been trying to entice Indian PSUs with the offer of stakes in its upstream fields and exploration blocks. Industry circles even hint at the possibility of ADNOC partnering the state-owned companies in the second phase of building crude storage caverns which will come up under the Public-Private Participation (PPP) model. Aramco is trying to team up with Reliance Industries in refinery and petrochemical sectors even as it remains committed to the mega refinery project that the state-owned companies have proposed on the west coast, but stuck over the choice of a suitable location.

Bilateral relations between India and Kuwait remain friendly and Kuwait is keen on making an investment in the refinery sector. It does not have high ambitions for the Indian market; it just wants a maximum of 26 per cent equity stake in any of the existing refinery projects. Indian Oil Corporation (IOC) is not keen to have it as a partner in any of its refineries. BPCL, which had shown initial enthusiasm, has now cooled to the idea and is not keen on further discussions. HPCL does not have any new project where it can be accommodated.

Kuwait’s presence in the Indian refinery sector will certainly give a further boost to the country’s petroleum sector but this perception is not shared by the PSUs. Foreign investments invariably come with elaborate conditions. Oil companies investing in a refinery project will try to drive a hard bargain for marketing rights. India’s petroleum retail market is virtually controlled by the three PSUs who are reluctant to part with those rights. In fact, all the three marketing companies, which together own 2/3rds of the country’s refining capacity, have now decided to almost double their retail networks in the next five years. This will inevitably forestall the entry of a foreign company into the retail market.

KPC is not interested in retailing. Its first priority is to find a refinery where it can come on board as a partner. At this stage, Indian PSUs cannot be expected to accept any unpalatable conditions. They are in fact in a position to dictate terms to foreign investors. The Indian market has grown dramatically and the companies in the Gulf, which all along had been keen to strike deals in the west, now find that they may have missed the bus.



To download the latest issue 'Volume 26 Issue 3 - May 10, 2019', click here
Petro Intelligence [FREE Access]
Aramco-Reliance Alliance Sparks Jitters
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Kuwait Petro: Left High And Dry
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Clear-Headed Regulation Required; Policy Tinkering Will Not Wor
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ONGC Resists Niti Aayog, Regains Its Mojo
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Foreign Investment
Oilex JV To Drill New Wells In Cambay Block
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Overseas Investment
RIL Shale Joint Venture On The Block
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Bangladesh’s New LNG Import Terminal Commissioned
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Tellurian’s Charles LNG Project Gets DoE Export License
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Gas Scene
Global Natural Gas Price Trends
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Domestic Natural Gas Price and Price Cap for Deepwater, High temp High Pressure Areas
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Capacity Utilization of LNG Regasfication Terminals in FY 2018-19
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Domestic Natural Gas Scene In March 2019
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BAU scenario: India’s CGD gas consumption projected to grow by 10%
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Global LNG Fleet
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Increasing Dependence of Imported RLNG
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Russian Company Gazprom’s Average Gas Production Cost
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Natural Gas Price: Global / India
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India’s Sectoral Consumption of Natural Gas (FY 2018, FY 2023 & FY 2030)
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CFSR Study Report - Seamless Development of Gas Value Chain
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Potential LNG and FLNG Projects Aiming for FID in 2019-2020
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Advantage of strong Regulatory Environment for CGD Industry
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Domestic, Global Natural Gas Price Trends
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Market Natural Gas and CGD: Attractive Industry
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Adani Gas: Infrastructure Development to Propel Gas Demand India
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Update: Coal Bed Methane (CBM) Gas Development In India
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LPG Business Continues Its Robust Saga
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Data Section
Monthly Upstream Data
Monthly Downstream Data
Historical database
Data Archives
Special Database
Indian crude basket price in April 2019 (in $ per bbl)
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India’s Petroleum Products Import Drops In FY 2018-19
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India Imports 226.642 MT Crude Oil In FY 2018-19
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Decline In Sales Of Passenger Vehicles A Matter of Concern
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Power Availability In March 2019
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Share of Domestically Produced Oil Shrinks To 16.3 % In Total Consumption
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Percentage share of High Sulphur (HS) & Low Sulphur (LS) crude oil processing
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Update: Refining Capacity - Company-wise, Sector-wise and Total
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Update: Oil Import - Volume and Price
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Reserve Replacement Ratio (RRR): Oil, Gas & CBM
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Amidst Falling Demand for Hybrid Vehicles, Europe See Record Sale of EVs
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World Oil Demand 2018 & 2019
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Global Drilling Rig Count Drops in February 2019
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Growth In Sales Of Passenger Vehicles, Two Wheelers drops
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Price build-up of PDS kerosene at Mumbai and Element-wise explanation
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Retail Selling Price (RSP) of major products in India & neighbouring countries
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Share of High Sulphur Crude Down In February 2019, Up In April-February
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Global Rig Count Vs Crude Prices
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Tenders [FREE Access]
ONGC
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ONGC
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