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India and Saudi invest $44 Billion to build world’s largest greenfield oil refinery

India Oilfield Services Market

Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum have signed an agreement with Saudi Aramco to set up the largest greenfield integrated oil refinery on the western coast in India at the ongoing 16th International Energy Forum (IEF).

India: The association of three state-run Oil Marketing Companies (OMCs) in India, have recently signed an agreement with Saudi Aramco which is the largest producer of crude oil in the world, to set up the largest greenfield integrated oil refinery on the western coast in India.

A Memorandum of Understanding (MoU) was signed by Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum (HPCL), during the 16th International Energy Forum (IEF) in the presence of India’s Oil minister and Saudi Arabia’s Minister of Energy, Industry and Mineral Resources.

The Minister of Energy, Industry and Mineral Resources for Saudi Arabia, in an interview stated that the leaders of both Saudi Arabia as well as India want to increase co-operation between the two countries on energy security and the move is the stepping stone in that direction. Saudi Aramco will be a 50 per cent equity partner and the rest 50 per cent will be held by the Indian consortium.

The Indian Oil Minister informed that the pre-feasibility study of the 60 Million Ton Per Annum (MMTPA) refinery is already complete and the refinery would be able to process 1.2 million barrels of crude oil and around 18 MMTPA of petrochemicals. The refinery is proposed to be built at Babulwadi at Ratnagiri in Maharashtra.

Saudi Aramco, the state-owned company would have the flexibility to rope in another strategic partner in its 50 per cent equity and an international oil and gas company has already shown interest in partnering with Aramco on the project. The Saudi Arabian Minister stated that the project cost of $44 billion is expected to come down as financial credit rating of Aramco is good, and the company has historically been bringing down the cost of its projects.

The Saudi energy minister also informed that 50 per cent of the crude requirement of the planned refinery project will be met by Saudi Arabia and the refinery will have the flexibility to source crude from other places. Aramco’s President and Chief Executive Officer (CEO) said the company expects the refinery to be operational before 2025.

According to TechSci Research, the proposed greenfield integrated oil refinery will open enormous potential for the Oilfield services and Oilfield chemical market in India as well as Saudi Arabia. Evolving technologies, rising demand for oil & gas and development of new fields like the one proposed are few of the factors that will drive the market for Oilfield services in India in the coming years. The refinery would also open up employment opportunities.

According to the recently published report by TechSci Research, India Oilfield Services Market, By Application (Onshore & Offshore), By Service (Drilling Services, Mud Engineering, Wireline Services, Pressure Pumping Services & Others), Competition Forecast & Opportunities, 2013 - 2027”, India oilfield services market stood at around $ 1.35 billion in 2017 and is forecast to grow at a CAGR of over 7% to surpass $ 2.84 billion by 2027. Growth in the market is anticipated on account of growing demand for oil & gas, rising on-site demand and evolving technologies being used in oilfields. West and East regions are expected to witness a faster growth due to the presence of larger oil fields and allocation of new blocks in both offshore and onshore sites. Moreover, rising foreign investments in Indian oil & gas sector and rising adoption of advanced technology is further expected to propel growth in India oilfield services market through 2027.

Moreover, TechSci Research believes that oilfield chemicals play a significant role at each stage of exploration and production of oil & gas, from drilling to transport of output from the field to refinery. Oilfield chemicals are used during this entire process with the prime objective of enhancing the production capacity and process efficiency. Saudi Arabia accounts for the second largest crude oil reserves globally, depicting efficient utilization of proved reserves. Moreover, increasing demand for fuel and energy in domestic as well as export market is shifting the focus of oil companies in Saudi Arabia towards offshore drilling activity, to further increase oil & gas production in the country.

According to the recently published report by TechSci Research, Saudi ArabiaOilfield Chemicals Market Forecast and Opportunities, 2020”, the oilfield chemicals market in Saudi Arabia is projected to surpass USD960 million by 2020. Growth in the market is expected on account of rising oil & gas production, along with anticipated growth in the exploration of shale gas depositsin the country. Saudi Arabia is home to 100 major oil and gas fields, of which 8 oilfields produce more than 50% of crude oil every year. Most of these large-capacity oilfields lie in the eastern province of the country, due to which the eastern province continues to dominate the market in terms of revenue contribution. Saudi Aramco is currently the largest oil and gas operatorin Saudi Arabia, while Baker Hughes is the leading oilfield chemicals producer, followed by Nalco Champion and REDA Oilfield.

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