17-01-05 Indian Oil Corporation (IOC) is planning to enter into a strategic alliance with the world's largest oil company -- Saudi Aramco -- which meets 11 % of world's oil demand and has reserves of 260 bn barrels.
Saudi Aramco is keen to store its crude in India's strategic petroleum reserves (SPR). Initial discussions have taken place between Saudi Aramco and IOC, which is setting up a 5 mm ton crude oil storage facility in India.

Another area of interest for Saudi Aramco is India's refining and marketing sector. The possibility of investment in grassroot refinery projects such as Paradeep (Orissa), Bhatinda (Punjab) and Bina (Madhya Pradesh) or picking up equity in an existing refinery-cum-petrochemical project is being explored.
On its part, IOC is keen on equity participation in small- and mid-sized gas projects, setting up a liquefaction facility and bringing equity LNG to India from Saudi Arabia. It is also looking at equity participation in some of the developed mid-sized oil and gas properties in Saudi Arabia besides joint participation with Saudi Aramco in undertaking projects in third countries like the Philippines.

These issues will be discussed at a meeting between IOC chairman and managing director M.S. Ramachandran and Saudi Aramco president Abdullah S. Jumah. Saudi Aramco is also planning to put up a very large refinery, in excess of 400,000 bpd, in Saudi Arabia mainly for processing domestic crude oil and exporting products. Participation of Indian companies is under discussion.
Saudi Arabia is India's single-largest crude oil supplier. India imported 23.6 mm ton of crude oil from Saudi Arabia in 2003-04 as against 18.8 tons in the previous year.

However, India's proposal on having long-term contract with Saudi Arabia for import of crude oil (five years or more) on official selling price (OSP) basis or favourable pricing, has not found favour with Saudi officials.
"If India wants security of supply, we also want security of demand. So I believe, a long-term contractwith special prices is not important. What is important is the strong relationship that exists today between the two sides. Moreover, the contracts we have today are evergreen and are not negotiated every year," Mr Jumah told.