To mark a retail presence in West Asia, Indian Oil Corporation (IOC) is expected to start its first retail outlet in Saudi Arabia within six months by setting up an equal joint venture company with Riyadh-based Al Jeri Group.
Based on the plans lined up by both companies, at least 200 retail outlets will be set up initially in Saudi Arabia. IOC’s foray will be significant at a time when Saudi’s national oil company Saudi Aramco is looking to enter into the Indian downstream market through a tie-up with Mukesh Ambani-led Reliance Industries.
During Prime Minister Narendra Modi’s recent visit to Saudi Arabia, an agreement was signed between IOC’s West Asian unit and the Al Jeri group, a local company that specialises in transport and delivery of bulk petroleum products as well as other bulk transports.
“This will be a 50:50 joint venture as local regulations require a partner from Saudi Arabia for retail entry. We will also sell our lubricants in that country; we currently do that through an agent,” said Gurmeet Singh, IOC’s director (marketing). Singh added that the companies were now waiting for some local clearances and the first outlet should come up within six months. “We have not decided on the number of outlets that we are going to come up with,” Singh added.
According to Al Jeri, it is the biggest transporter of Aramco products in the region, carrying more than 28 per cent of the company’s products currently. It also offers border-crossing services at all major Gulf Co-operation Council (GCC) border crossings. “There is enough local demand in both fuel and lubricant space in Saudi,” Singh said.
At present, IOC has marketing subsidiaries in countries like Sri Lanka, Nepal and Mauritius. Singh said IOC was also looking to enter into fuel marketing and retail business in Myanmar. This was after Myanmar Petroleum Products Enterprise (MPPE) invited private companies to form a joint venture for import, storage, distribution and sale of all petroleum products. IOC is also in the process of laying a pipeline between Raxaul in Bihar and Amlekhgunj in Nepal for an annual capacity of 1.3 million tonnes.
Apart from Aramco, other companies including Russian giant Rosneft, French major Total, Abu Dhabi National Oil Company (Adnoc) and Kuwait Petroleum International (KPI) have also shown interest in the Indian market. Several foreign players, including Saudi Aramco, BP, ExxonMobil and Total, are also expected to show their interest in the proposed strategic sale of government-controlled Bharat Petroleum Corporation.