By Rania El Gamal, Davide Barbuscia and Marwa Rashad

DUBAI/RIYADH (Reuters) – The slump in demand for crude during the coronavirus pandemic has forced oil companies to contemplate the possibility that the fossil fuel market has peaked and the time for a global energy transition has come.

But Saudi Aramco plans to boost its production capacity so it can pump as much of Saudi Arabia’s vast oil reserves when demand picks up – before a shift to cleaner energy makes crude all but worthless, industry sources and analysts told Reuters.

With almost 20% of the world’s proven reserves and production costs of just $4 a barrel, Aramco believes it can undercut competitors and carry on making money even when lower oil prices make it unprofitable for rivals, the sources said.

Riyadh now plans to follow through on its apparent threat in March during an oil price war with Russia to raise its capacity to 13 million barrels a day (bpd) from 12 million bpd, officials and sources have said.

Aramco’s approach is in stark contrast to Western rivals such as BP and Shell which plan to curb spending on oil production so they can invest in renewable and green energy as they prepare for a low-carbon world.

With a renewed focus on oil, the state-run oil giant is also revising ambitious downstream expansion plans and now aims to grab assets in established projects in key markets such as India and China, rather than building expensive mega plants from scratch, the sources said.

“We expect oil demand growth to continue in the long term, driven by rising populations and economic growth. Fuels and petrochemicals will support demand growth … speculation about an imminent peak in oil demand is simply not consistent with the realities of oil consumption,” Aramco said in a

By Nidhi Verma, Aftab Ahmed and Vladimir Soldatkin

NEW DELHI/MOSCOW, Sept 29 (Reuters)Rosneft and Saudi Aramco are unlikely to bid in the privatisation of Indian refiner Bharat Petroleum Corp BPCL.NS, sources familiar with the matter said, as low oil prices and weak demand curb their investment plans.

Russia’s Rosneft ROSN.MM had expressed an interest in buying the federal government’s 53.29% stake in Bharat Petroleum (BPCL) when its chief executive Igor Sechin visited New Delhi in February, while India’s trade minister has said that Saudi oil giant Aramco 2222.SE was enthusiastic about the stake sale.

A Rosneft source, however, said it will not buy BPCL, while another said the Russian oil major would only be interested in BPCL’s marketing business, which is comprised of fuel depots and more than 16,800 fuel stations.

“For this, India has to sell BPCL in parts,” the source said.

India’s government, which is looking to finance welfare schemes and bridge a fiscal deficit that has already topped the annual target, had aimed to raise $8 billion to $10 billion through the sale of its stake in BPCL.

But BPCL’s share price has plunged by nearly 30% over the past year to trade at about 386 rupees on Tuesday.

“This is not the time to invest in refining … demand would be there for oil to chemicals and not conventional products,” one of the sources familiar with Aramco’s thinking said.

Rosneft and India’s finance ministry did not respond to requests for comment.

“We continue to explore potential growth opportunities in Asia, including India, and will make appropriate updates as and when necessary,” Aramco said, declining further comment.

The Saudi government discussed BPCL’s privatisation with an Indian oil ministry official in July, an oil ministry document showed.

However, a second source familiar with Aramco’s