Saudi Aramco Eyes Investment in Indian Refineries, Sources Reveal

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By Nidhi Verma

NEW DELHI (GudangMovies21) – Saudi Aramco is negotiating potential investments in two proposed refineries in India, as the global leader in oil exports seeks a consistent avenue for its crude in what is currently the quickest expanding developing economy worldwide. Multiple Indian sources privy to these discussions have stated this information.

India, the world's third-biggest oil consumer and importer, wants to become a global refining hub as Western companies cut crude processing capacity in their shift to cleaner fuels.

In the meantime, Saudi Arabia’s portion of India's oil imports has decreased because refineries that have spent billions on improving their facilities are broadening their raw material sources to take advantage of more affordable options, such as those coming from Russia.

Separate discussions are underway for Aramco to invest in BPCL’s upcoming refinery project in Andhra Pradesh, located in the south, as well as in an ONGC refinery initiative in Gujarat, which is in the west, according to the sources.

Aramco, BPCL, and ONGC did not provide immediate comments when contacted.

Both of these Indian companies are under state control.

Although ONGC's refinery plans for Gujarat are still in their early stages, BPCL's chairperson mentioned in December that they intended to invest approximately $11 billion in the company’s refinery and petrochemical initiative in Andhra Pradesh.

Two separate sources from the refineries stated independently that these initiatives will move forward irrespective of whether Aramco decides to invest.

One of them stated, 'It all hinges on the offer that Aramco presents.'

According to sources, Saudi Aramco plans to provide an amount of oil equaling triple its ownership stake in each venture. The company also intends to dispose of its portion of the output through sales within India or via exports.

"The desire for adaptability in purchasing crude oil exists. However, when we offer them a 30% share, they insist on supplying crude equal to 90% of our plant’s capacity, which isn’t feasible," explained the second refinery source.

Additional specifics such as possible funding amounts and the setup plans for the proposed refineries have yet to be disclosed.

The Indian Prime Minister, Narendra Modi, intends to travel to Saudi Arabia during the next quarter, according to a third source familiar with the situation, and both nations aim to finalize an agreement prior to his arrival.

The Indian Ministry of External Affairs did not reply to requests seeking comments.

Aramco has been actively seeking refining prospects in India for a considerable time.

In 2018, it became part of an alliance consisting of various Indian enterprises aimed at constructing a refinery and petrochemical facility with a capacity of 1.2 million barrels daily in Western India. Then, in 2019, it entered into a preliminary pact securing a potential 20% share in Reliance Industries’ oil-to-chemicals division.

Nevertheless, the extensive refinery project has faced delays because of challenges related to acquiring land, and the agreement with Reliance was terminated due to disagreements regarding valuation.

In January, Indian Oil Minister Hardeep Singh Puri stated that India plans to establish three refineries, each with a capacity of 400,000 barrels per day. (Note: This article has been updated to reflect that India’s foreign ministry did not reply to requests for comments mentioned in paragraph 14.)

(Nidhi Verma reports. Additional reporting by Shivam Patel in New Delhi and Yousef Saba in Dubai. Edited by Mark Potter)

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