Saudi Aramco, the world’s largest oil-exporting company, is looking for investment opportunities in India amid a surge in crude demand in the South Asian country, its president and chief executive has said.
In terms of crude imports, both China and India – two large oil-consuming countries – have surpassed pre-pandemic levels, Amin Nasser said during the Opec International Seminar in Vienna on Wednesday.
China’s crude imports hit a record 16 million barrels per day in March as its economy recovers following the lifting of Covid-19 restrictions earlier this year, the International Energy Agency said in its April oil market report.
China was the largest importer of oil from Saudi Arabia last year, buying about 1.75 million barrels per day.
In March, an Aramco unit acquired a 10 per cent stake in Shenzhen-listed Rongsheng Petrochemical in a deal valued at $3.6 billion to expand its refining operations in China.
In December, Aramco and China Petroleum and Chemical Corporation signed an initial agreement to build a refinery and a petrochemicals plant in China.
The 320,000-bpd refinery and 1.5 million tonnes-per-year petrochemical cracker complex will be operational by the end of 2025.
Mr Nasser said that rising crude demand from China and India would lead to an “imbalance” in the oil market amid underinvestment in new oil and gas projects.
“Their priority is raising the [living] standards for their people and sustainability comes next. In Asia alone, there are 150 million people with no electricity,” Mr Nasser said.
While policies such as the Inflation Reduction Act in the US and similar initiatives in the EU will support energy transition in those countries, such incentives will not work for developing economies, Mr Nasser said.
“We need all the resources including the renewables … the problem is that we are trying one size fits all.”
The IRA, enacted last year, offers a series of tax incentives on wind, solar, hydropower and other renewables, as well as a push towards electric vehicle ownership.
It is expected to spur about $3 trillion of investment in renewable energy technology, according to Goldman Sachs.
The International Energy Agency and Opec expect the oil market to tighten in the second half of the year, supported by a rebound in crude demand in Asia and Opec+ production cuts.
However, Brent, the benchmark for two thirds of the world’s oil, has lost nearly 11 per cent of its value since the beginning of the year on economic slowdown concerns and resilient Russian crude supply.
“We are optimistic about the future,” Mr Nasser told reporters on the sidelines of the event.
As global economies recover and jet fuel consumption picks up, crude demand will grow further, he said.
India, which overtook the UK as the world’s fifth-largest economy last year, has been focusing on diversifying its crude supply while increasing domestic production.
The country has increased imports of discounted Russian oil since the start of the Ukraine war last February.
Russian oil cargoes to India rose to 44 million tonnes last year, from 6.5 million tonnes a year earlier, according to VesselsValue, a valuation company.
