NEW DELHI - Saudi Basic Industries Corp (SABIC), the world's No.4 petrochemical company, wants to buy about half of the $4.6-billion Indian petchem project backed by Oil and Natural Gas Corp (ONGC), two sources familiar with the matter said.
ONGC is a majority shareholder in ONGC Petro Additions Ltd (OPaL), which operates India's biggest petrochemical plant in western Gujarat state.
"They (SABIC} want to have a significant stake in OPaL, around 50 percent," said one of the sources.
Previously, ONGC had held talks about selling a stake in the project with Saudi Aramco and Petrochemical Industries Co, a unit of Kuwait Petroleum Corp, a second source said.
"SABIC is the latest entrant. Recently SABIC has held talks with ONGC officials about a stake purchase," the second source said.
ONGC and SABIC did not respond to Reuters' requests for comment.
India and Saudi Arabia want to strengthen their trade ties. Saudi Aramco recently signed an initial deal with India to buy a 50 percent stake in a planned 1.2 million barrels per day west coast refinery and petrochemical project.
To expand its footprint in the world's third-biggest oil importer, Saudi Arabia is also scouting for a stake in existing major refineries, its energy minister Khalid al-Falih has said.
The first source said OPaL made an operating profit for the first time in 2017/18, increasing its appeal to prospective investors. "There are enough green shoots in the company," the source said.
India's per capita consumption of synthetic polymers, used to make various grades of plastics, is just 10 kg (22 lbs) a year, compared with a global average of about 32 kg.
The country's per capita consumption of petrochemicals will rise with its expanding middle class, growing income levels and increasing urbanisation, Prime Minister Narendra Modi said in March last year.
The second source said OPaL operated the project at about 65 percent capacity in the March quarter and it aimed to operate the plant at about 80 percent capacity in 2018/19.
($1 = 67.2600 Indian rupees)
(Additional reporting by Promit Mukherjee in MUMBAI; Editing by Mark Potter) ((firstname.lastname@example.org; +91 11 49548031; Reuters Messaging: email@example.com))