Gulf oil producers want to lock in customers in Asia, which is experiencing a wave of refinery expansion, as the US shale boom has hit demand for their oil in Western economies.
India, the world’s fourth largest oil consumer, imports about 80pc of its oil needs and plays a growing role as a regional refining hub.
The South Asian nation imports around 16 million tonnes of crude a month – more than it consumes – and exports about a third of that as refined products.
State-run IOC, the country’s biggest refiner, aims to start crude processing at its 300,000 barrels per day (bpd) coastal refinery in the eastern state of Orissa by the end of this year.
“Kuwait has sought a 50pc stake in the refinery and the proposed petrochemical plant, along with marketing rights for fuels,” said one of the sources, adding that IOC might settle for a smaller stake and keep control of the refinery.
This source said KPC wanted to reserve the right to later sell a part of its stake in the Indian project to any international oil company. Kuwait wants to strengthen its role in India’s oil-gas sector and wants to lease a part of its strategic storage, being built to hedge against energy security risks. Kuwait was India’s fourth biggest oil supplier in fiscal 2013/14, supplying about 409,000 bpd. “KPC has several interests and opportunities in India and this is one of the main ones,” said a second source. “India is always on the radar. KPC is interested in Paradip but both sides haven’t agreed on the details yet.”