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Wednesday, November 25, 2020

Explained: Here is why Abu Dhabi’s national oil company’s investment plans are important for India

Why are Abu Dhabi National Oil Company's investment plans in India important and who are potential partners?

Written by Karunjit Singh , Edited by Explained Desk | New Delhi | Updated: November 3, 2020 2:18:59 pm
Abu Dhabi oil company investment in India explained, ADNOC investment in India, India oil, Abu Dhabi oil, Indian ExpressADNOC is one of the world's largest energy producers. (Bloomberg Photo: Christophe Viseux)

The Abu Dhabi National Oil Company (ADNOC), one of the world’s largest energy producers, has announced that it is looking for partner companies in India to invest in India’s downstream petrochemicals space. But why are ADNOC’s investment plans important and who are potential partners in India?

What is ADNOC looking to invest in?

ADNOC had in 2018 announced that it was planning to invest $45 billion over five years to expand its refining and petrochemicals operations. The company has stated that it has plans to invest in overseas markets such as India where oil consumption is growing.

ADNOC has also signed an MoU to acquire a 50% stake in the Ratnagiri Refinery & Petrochemicals Ltd. jointly with Saudi Aramco with the other 50% being held by state-owned oil marketing companies Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd, and Hindustan Petroleum Corporation Ltd. The Ratnagiri Refinery which is expected to be commissioned in 2025 is still facing hurdles in land acquisition.

ADNOC is also the only foreign company to invest in India’s Strategic Petroleum Reserves by storing crude oil in strategic reserves in Padur. The company is also seeking to expand investment in India’s strategic petroleum reserves. 📣 Express Explained is now on Telegram

Who could be potential partners for ADNOC?

According to experts, ADNOC would likely partner with Reliance Industries Ltd. (RIL) or the leading state-owned oil marketing companies which could help ADNOC with marketing and operations.

“An Indian partner would help provide the marketing machinery to allow ADNOC to reach institutional customers and SMEs along with an element of running operations,” said Vivekanand Subbaraman, analyst at Ambit Capital.

Experts also noted that Indian players may benefit from the technical know-how and the ability to source raw materials more easily from partnering with a global oil major like ADNOC.

Notably, ADNOC is already planning on partnering with RIL through a framework agreement signed in December 2019 to explore the development of an Ethylene Dichloride facility in Ruwais complex in Abu Dhabi.

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