india

Updated: Oct 30, 2019 01:51 IST

India and Saudi Arabia on Tuesday took several steps to move from a buyer-seller relationship to a strategic partnership in the energy sector, including the signing of a memorandum of understanding (MoU) on strategic petroleum reserves.

Saudi Arabia is currently the second largest source of energy for India, accounting for 18% of the country’s oil supplies.

Cooperation in the energy sector, including the creation of strategic petroleum reserves and collaboration in renewable energy, was a key part of Prime Minister Narendra Modi’s discussions with the top Saudi leadership, including King Salman bin Abdulaziz Al Saud.

Modi also expressed his appreciation for Saudi Arabia’s provision of regular oil supplies in the aftermath of the September attack on the facilities of state-run Saudi Aramco, which knocked out about 5% of global crude production.

Saudi Aramco and Indian Strategic Petroleum Reserves Limited (ISPRL) signed a memorandum of understanding and TS Tirumurti, secretary (economic relations) in the external affairs ministry, said Saudi Arabia is keen to play a role in the creation of strategic petroleum reserves at Padur in Karnataka.

He added that it was only a matter of time before the two sides finalise the details and terms and conditions for this project.

The reserves are meant to serve as a buffer against volatility in oil prices and potential disruptions of supply. The facility in Padur will have a storage capacity of 2.5 million tonnes, and India has other strategic reserves with a capacity of 5.3 million tonnes.

Another MoU was signed by the Middle East unit of Indian Oil Corporation and Saudi Arabia’s Al Jeri group for downstream cooperation, including setting up retail outlets in the kingdom. Yet another MoU focused on cooperation in the field of renewable energy, Tirumurti said.

Tirumurti further said a study is being conducted for the setting up of the world’s largest greenfield refinery at Raigarh in Maharashtra by Saudi Aramco, Adnoc of the United Arab Emirates and Indian public sector oil companies. The parties are “confirming some parameters of the project”, he said.

“There is determination on both sides to take this (project) forward,” Tirumurti said.