Kuwait Petroleum Corporation, Saudi Aramco and National Iranian Oil Company have started talking to several Indian oil companies, including Hindustan Petroleum Corporation Ltd and Essar Oil, to set up joint-venture grassroot refineries in the country.
All three oil giants are seeking to sign partnership deals quickly with any refinery here to enter into a binding contract for their feedstock (crude oil).
With crude oil prices scaling new highs, the three members of the Oil Producing and Exporting Countries want to rapidly raise their production quotas.
Any raising of their production quotas will have major implications for international oil prices.
Industry sources claim that the three OPEC members have several reasons for wanting to invest in Indian refineries.
"Being a shareholder in refineries here in India, these OPEC members will be able to raise their production quotas as they will have a dedicated customer here. Moreover, these oil majors are keen to enter the Chinese market and Indian refineries, with their surplus production can feed the growing demand in China."
Saudi Aramco, KPC and NIOC have begun talks with HPCL for picking up equity in the state-owned company's 9-million tonne Guru Gobind Singh Refinery at Bhatinda in Punjab.
They are also talking to Essar Oil, the private company that is setting up a 10.5 million tonne refinery at Vadinar in Jamnagar, Gujarat.
Confirming that the three OPEC members were talking to HPCL about participating in the equity of the Guru Gobind Singh Refinery, M B Lal, chairman and managing director of HPCL, told Business Standard: "We are looking at a partner to offer equal equity (26 per cent). The remaining 48 per cent will be offered to the public."
A senior executive at Essar Oil said, "KPC, Saudi Aramco and Iranian oil company are holding talks with us to pick up equity in our refinery."
Industry sources claim that Abu Dabhi National Oil Company has also shown interest in the Essar Oil's refinery. Lal of HPCL pointed out that the refinery would move away from the original product mix and would also have the flexibility of processing heavier crudes.
"We will process heavy and very heavy crude at the refinery," he added.
While India imports over 70 per cent of its crude oil requirement, India's refining capacity is higher than its consumption of petroleum products.
India has about 125.97 million tonnes of refining capacity but consumes only about 110 million tonnes of petroleum products. The surplus is exported.