* Kuwait Petroleum eyes 50 pct stake in Paradip refinery
* Kuwait wants to supply 60 pct of refiner's oil needs
By Nidhi Verma and Rania El Gamal
NEW DELHI/DUBAI, Sept 3 Kuwait Petroleum Corp
(KPC) aims to pick up a significant stake in Indian Oil Corp's
Paradip refinery and supply about 60 percent of the oil
needs of the plant, set to start up later this year, three
sources with knowledge of the matter said.
Gulf oil producers want to lock in customers in Asia, which
is experiencing a wave of refinery expansion, as the U.S. shale
boom has hit demand for their oil in Western economies.
India, the world's fourth largest oil consumer, imports
about 80 percent of its oil needs and plays a growing role as a
regional refining hub.
The South Asian nation imports around 16 million tonnes of
crude a month - more than it consumes - and exports about a
third of that as refined products.
State-run IOC, the country's biggest refiner, aims to start
crude processing at its 300,000 barrels per day (bpd) coastal
refinery in the eastern state of Orissa by the end of this year.
"Kuwait has sought a 50-percent stake in the refinery and
the proposed petrochemical plant, along with marketing rights
for fuels," said one of the sources, adding that IOC might
settle for a smaller stake and keep control of the refinery.
This source said KPC wanted to reserve the right to later
sell a part of its stake in the Indian project to any
international oil company.
The sources who spoke to Reuters declined to be identified
because of the sensitivity of the topic.
IOC Chairman B. Ashok did not respond to telephone calls
from Reuters seeking comment, while a KPC spokesman could not
immediately be reached for comment.
Kuwait wants to strengthen its role in India's oil gas
sector and wants to lease a part of its strategic storage,
being built to hedge against energy security risks. Kuwait was
India's fourth biggest oil supplier in fiscal 2013/14, supplying
about 409,000 bpd.
"KPC has several interests and opportunities in India and
this is one of the main ones," said a second source. "India is
always on the radar. KPC is interested in Paradip but both sides
haven't agreed on the details yet."
IOC, along with subsidiary Chennai Petroleum, controls about
a third of India's oil refining capacity of 4.3 million bpd.
KPC and IOC officials had a meeting in India during the last
week of August to discuss KPC's participation, two of the
sources said. KPC will acquire a stake through its overseas
downstream subsidiary, Kuwait Petroleum International.
Kuwait wants a potential joint venture with IOC to sign a
deal for long-term crude supply with KPC, they said.
The new refinery will cater to rising demand for fuel as
India is keen to boost the share of manufacturing in its
Paradip is IOC's most complex refinery and capable of
handling cheaper grades that are more difficult to handle. The
refinery will have a potential to produce about 6.3 million
tonnes of diesel and 3.6 million tonnes of petrol, which will
largely be absorbed by the domestic market.
(Reporting by Nidhi Verma; Editing by Clarence Fernandez)