'New era' for Saudi-Indian ties

King Abdullah and Indian Prime Minister Manmohan Singh sign the deal

India and Saudi Arabia have signed a deal to develop a strategic energy partnership and have agreed to "fight the menace of terrorism" together.

The agreement was signed at the end of a four-day visit to India by the Saudi King Abdullah.

The deal promises to provide India with a "reliable, stable and increased volume" of crude oil supplies.

India and Saudi Arabia also agreed to improve co-operation to "combat and eradicate the menace of terrorism".

In a joint declaration the king's visited was described as "heralding a new era in India-Saudi Arabia relations and constitutes a landmark in the development of increased understanding and cooperation between the two countries."

Joint ventures

The two sides agreed to joint ventures, both in public and private sectors, in oil and gas sectors in India and Saudi Arabia as well as in third countries.

There is also agreement on Saudi investments in oil refining, marketing and storage in India, subject to commercial viability and the setting up of India-Saudi ventures for gas-based fertiliser plants in Saudi Arabia.

Saudi Arabia currently supplies nearly 175 million barrels of crude oil a year - a quarter of India's oil needs.

India imports 70% of its supplies and is currently exploring fresh supplies from Central Asia to South America.

Saudi Arabia, the world's biggest oil exporter, is keen to strengthen ties with India and China, whose booming economies have raised their energy requirements.

The statement said the two governments would actively cooperate to fight terrorism and crimes like money laundering, drugs and arms smuggling.

The two sides also called for exploration of investment opportunities in all sectors, including infrastructure, in both countries and also affirmed the importance of stability in the oil market for the world economy.