Saudi Arabia has assured billionaire Mukesh Ambani’s Reliance Industries to supply all the committed crude oil volumes in October as the world’s largest oil exporter recovers faster than expected from the biggest attack ever on its oil industry. Saudi Arabia’s “Aramco has been a major and reliable supplier of crude oil for Reliance for over 20 years, both in terms of volume of crude supply as well as a mix of various grades of crude oil,” Reliance said in an email response to a questionnaire on supplies from the Kingdom.
Saudi Arabia is still recovering from the September 14 drone and missile assault on its main oil facility that knocked out about 5.7 million barrels a day, about half of the country’s output. Its state energy company, Saudi Aramco, has vowed not to reduce shipments to customers as it draws down strategic reserves. “It was reassuring that Aramco maintained scheduled crude supplies and fulfilled their supply commitments, in spite of the setback caused by the attack on their crude supply infrastructure,” Reliance said.
In the immediate aftermath of the incident, Aramco maintained supply to Reliance’s twin refineries at Jamnagar in Gujarat with alternate grades of crude oil. “The alternate grades being heavier suited Reliance’s refining needs,” it said without giving details. “That the volume and schedule of supply was maintained soon after the incident is creditable. Aramco has confirmed and reassured that supplies for October will be maintained both in terms of quantity and mix of grades as per our requirement.”
Reliance is in preliminary talks to sell one-fifth of its oil-to-chemical business, which comprises of its Jamnagar refineries and petrochemicals plants, to Aramco at a valuation of USD 75 billion, the company chairman Mukesh Ambani had said last month. As part of the deal, Saudi will supply as much as 5,00,000 barrels per day of crude oil or 25 million tonnes annually to Reliance. The company did not say how much crude oil it currently buys from Saudi.
“The resilience of Saudi Aramco in ensuring uninterrupted supplies to the global markets in trying times has served as a great reiteration of their reliability as a large global supplier of crude oil,” the company said. Saudi is India’s second-biggest oil supplier behind Iraq. It supplies roughly a fifth of India’s oil imports. Saudi Aramco, the most profitable company in the world, controls the world’s second-largest proven crude reserves at more than 270 billion barrels. For Reliance, the partnership will go a long way in insulating it from any future oil shocks as well as help trim its debt.