New Delhi, March 2: The government is showcasing several upcoming projects in the oil and gas sector to attract foreign investments from the Gulf nations.
Besides bringing in FDI, the move is expected to strengthen strategic relations and boost energy security.
The oil-rich kingdoms of Saudi Arabia, Qatar and Kuwait are keen to invest in Indian infrastructure projects as the country’s economy is showing signs of recovery even though Europe and the US have not fully come out of the economic crisis.
“There have been queries from the Gulf nations and the country is also keen on attracting foreign investment as the region is one of the major suppliers of crude and natural gas to the country,” oil ministry officials said.
The bilateral investment protection agreement between India and the United Arab Emirates and the approval of the Jet-Etihad deal have boosted the confidence of investors in that region.
Analysts said the country must find ways to attract the large amount of capital available in the Gulf. “If FDI is going to be critical in strengthening India’s macroeconomic stability, the Gulf remains one of the most underutilised sources. Any improvement in India’s investment climate will automatically boost the engagement with the Gulf,” they said.
However, tax is one of the cause for concern. Saudi Arabia’s minister of commerce and industry Tawfiq al Rabiah, who was here recently, said, “The capital gains tax continues to be a major impediment to Saudi investments in India, and I call on the Indian authorities to explore relaxation of this issue.”
Officials said global energy firms from Saudi Arabia and Kuwait have shown interest in some of the oil and gas projects, including the petrochemical complex being set up by ONGC Petro Additions Ltd in Gujarat and by ONGC in Mangalore; the LNG import terminal and Paradip refinery projects of Indian Oil Corporation and Bharat Petroleum’s Kochi petrochemical project.
The Paradip refinery, having a capacity of 15 million tonnes (mt) per annum, and petrochemical project is being set up by IOC in Odisha, while BPCL is expanding the capacity of its Kochi refinery to 15.5mt from 9.5mt. The company also plans to set up a petrochemical complex in a joint venture and is looking for global players as partners. The proposed complex is likely to require an investment of $1.8 billion.
IOC is also setting up a 5mt LNG import, storage and regasification terminal along with all associated facilities and utilities at Ennore at an estimated cost of $864 million. The company is looking for short- or medium-term sourcing tie-up for 2.5-5mt LNG and a potential partner for the project.
ONGC has signed an initial agreement for strategic partnership with Kuwait Petroleum Corp in the two upcoming petrochemical projects.