The public sector crude refining companies in India have been asked to scale up imports from Africa and the US along with Saudi’s decision to raise OSP of Oil Shipments to Asia in May. There is a stand-off going on between India and Saudi Arabia on the crude oil imports. The stand-off between India and Saudi escalates the Kingdom, which in turn increased the crude oil price for India and Asia cutting imports from the gulf nation. The purchase plan of Saudi Aramco’s Stake in Reliance O2C Ltd. remains unaffected. Aramco’s officials gave a statement that they are pretty serious with the discussion going on, with doing partnership with Reliance. There has been a positive response from both the nations until now and the discussion is under progress. The rise in the crude oil prices has driven the market growth of the oil refinery companies lately. Aramco, which is the world’s largest oil producing company is expecting a strong growth performance with respect to the price hike in the crude oil.
The brent Crude price has increased considerably as compared to the previous years. The brent crude prices is now around $65 per barrel, whereas it was just $38 in the early November last year. The Bank of America already gave an estimate about the cashflow for Aramco in the year 2022. Bank of America said that Aramco is estimated to generate cash flow close to $100 billion in cash flow in 2022. Aramco will be selling its stake in pipelines to an institution created by the US-based EIG Global Energy Partners. Aramco will be finalizing this deal with the US-based EIG Global Energy Partners, by selling 49% of its stake for around $12.4 billion. This deal will help Aramco to generate a surplus cashflow. This deal would be Aramco’s largest deal as in the late 2019, it recorded an IPO of 429.4 Billion.
As the coronavirus pandemic weighed heavily on global demand, the energy giant posted a 44.4 per cent slump in net profit in 2020, due to lower crude prices. Aramco suffered a heavy loss in the year 2020 due to the pandemic situation. The net income of Aramco in the year 2019 was around $88.2 billion, whereas it recorded just $49 Billion in 2020. India is the third largest importer and consumer of the crude oil in the world. All the public sector crude refining companies have been advised to increase the import of crude oil from the US and Africa following Saudi Arabia. As there has been a decision taken to increase the official selling price (OSP) of oil shipments to Asia in May. Saudi Arabia, which is considered as the worlds largest crude oil exporter has taken this decision as a retaliation to India’s plan to cut crude imports from the country. Aramco is expected to pick up 20 per cent stake in the company’s newly floated subsidiary Reliance O2C for $15 billion, Mukesh Ambani, the Chairman and Managing Director of Reliance Industries confirmed once in 2019. Aramco sees Reliance as a dedicated Buyer of their crude oil. Apart from this, Aramco finds an opportunity in Reliance O2C’s plan to increase production of petrochemicals by reducing fuel output.
