ONGC, Saudi Aramco MoU: A framework for enhanced cooperation between two nations
To explore a strategic alliance on a broad range of energy prospects, ONGC has inked a Memorandum of Understanding (MoU) with Saudi Aramco. The two energy companies will look into long-term supply contracts for the sale and purchase of crude, refined petroleum and petrochemical products to create secure and competitive energy sources for the Indian market. The MoU was signed by ONGC CMD Subhash Kumar and Saudi Aramco Senior Vice President of Downstream Mohammed Yahya Al Qahtani on 18 November 2021 at the Saudi Arabia Pavilion at Dubai Expo 2020.
Signing of MoU
Speaking on the occasion, Mr Kumar said that the MoU will mark the beginning of a great partnership between two large oil companies of the world. “This will also set the framework for greater cooperation between the two countries, which have the capacity to complement each other and meeting each other’s requirements,” he said. The CMD said bilateral energy relationship has been one of the cornerstones of the solid historical ties between India and Saudi Arabia. He said this collaboration will bolster both companies’ capabilities, leveraging in-house competencies while creating value for all stakeholders and offering a framework for expanding the cooperation in other energy-related areas.
“We produce, between domestic and international operations, about 60 million tons of oil and oil equivalent. Our refining capacity through two subsidiaries, HPCL and MRPL, and some joint venture companies would be soon touching around 60 million tons. At that stage, in terms of capacity, we will be the second largest refining group in the country,” Mr Kumar said. He further noted that ONGC also has two state-of-the-art petrochemical complexes and expressed hope of collaboration at complex level. “We are sourcing a substantial quantity of crude, especially MRPL. Roughly 25 per cent of its requirement comes from Saudi Aramco. Our relationship can take it to a much higher level,” he added.
The CMD went on to complement the teams of the two national oil companies for quickly coming up with the MoU, which he said will be referred to in history as a path breaking initiative.
ONGC CMD (left) and Saudi Aramco Senior Vice President of Downstream (right)
ONGC and Saudi Aramco hope to utilize their affiliates in this strategic alliance, namely; Mangalore Refinery and Petrochemicals Ltd. (MRPL), ONGC Petro-additions Ltd. (OPaL) and ONGC Mangalore Petrochemicals Ltd. (OMPL) of ONGC and Aramco Trading Company (ATC) of Saudi Aramco. Both parties also look forward to exploring low carbon energy demand and supply as part of this strategic alliance.
Saudi Aramco Senior Vice President of Downstream Mohammed Yahya Al Qahtani said this MoU is an opportunity to forge strategic alliance. He said it is increasingly important as India continues its powerful and historic journey for economic transformation. “This ceremony is a testament to the strong and valuable relations between our economies, our countries and our people. Saudi Arabia and India enjoy a strong relationship. India is a strategic and significant market of the Kingdom and we look forward to enhancing our synergies by providing mutually-beneficial opportunities through our global-scale trading network and system with a competitive offering,” he said.
Further, Mr Qahtani noted that the Kingdom is India’s fourth largest trading partner and added that he hopes this will open more areas of collaboration in the future to expand global footprint. “We are well positioned and ready to ensure energy security that India needs to continue its incredible journey. We believe this will create a platform for long-term value creation and lead to many opportunities for success in the future as well,” he said.