RIYAD: Saudi Aramco is in talks to invest in two planned refineries in India as the world’s top oil exporter seeks a stable outlet for its crude in the country, which is the fastest-growing emerging market, according to sources with direct knowledge of the matter.
India, the world’s third-largest oil consumer and importer, aims to become a global refining hub as Western companies scale down crude processing capacity in their shift to cleaner fuels. Meanwhile, Saudi Arabia’s share of India’s oil imports has been declining as refiners diversify crude sources to tap cheaper alternatives, including Russian supplies.
According to sources, Aramco is in separate discussions to invest in Bharat Petroleum Corporation Ltd’s (BPCL) planned refinery in Andhra Pradesh and Oil and Natural Gas Corporation’s (ONGC) proposed refinery in Gujarat. Both Indian firms are state-controlled.
While ONGC’s Gujarat refinery plans are at an early stage, BPCL’s chairman stated in December that the company aims to invest $11 billion in its Andhra Pradesh refinery and petrochemical project.
Two refinery officials said the projects would proceed irrespective of whether Aramco invests. “It all depends on the proposal that Aramco puts forward,” one of them reportedly said.
State-controlled Aramco is proposing to supply oil equivalent to three times its stake in each project and wants the flexibility to sell its share of production either in India or through exports, sources said.
“We want flexibility in crude procurement. If we give them a 30 per cent stake, they want to supply crude equivalent to 90 per cent of the capacity, which is not possible,” said a second refinery source.
Details regarding the potential investment size and the configuration of the planned refineries have not yet been finalised.
Indian Prime Minister Narendra Modi is expected to visit Saudi Arabia in the second quarter, and the two countries will attempt to finalize an agreement before the visit, a source familiar with the matter said.
Aramco has long sought refining opportunities in India. In 2018, Aramco joined a consortium of Indian companies to build a 1.2 million barrels per day refinery and petrochemical project in western India. In 2019, it signed a non-binding agreement to acquire a 20 per cent stake in Reliance Industries’ oil-to-chemical business.
However, the western India refinery project has been delayed due to land acquisition challenges, while the Reliance deal fell through over valuation disagreements.
In January, Indian Oil Minister Hardeep Singh Puri said India plans to set up three new refineries of 400,000 barrels per day each.
(With inputs from reports)
