Latest News

Saudi Aramco is looking to invest in Indian refining, sources claim

Saudi Aramco is looking to invest in Indian refining, sources claim

Saudi Aramco has been in discussions to invest in two refineries planned in India, as the world’s largest oil exporter seeks a stable outlet for crude oil in the fastest-growing market in the world.

India, which is the third largest oil importer and consumer in the world, wants to be a global refinery hub, as Western companies reduce their crude processing capacity to switch to cleaner fuels.

Saudi Arabia's share in India's oil imports is declining as refiners who have invested billions to upgrade their plants are diversifying crude sources, including Russia, to tap into cheaper alternatives.

Aramco has separate discussions to invest in Bharat Petrol Corp's (BPCL), a planned refinery located in southern Andhra Pradesh, and a proposed Oil and Natural Gas Corp. (ONGC), a refinery located in western Gujarat.

Aramco, BPCL, and ONGC didn't immediately respond to comments.

Both Indian companies are controlled by the state.

ONGC is still in the early stages of its Gujarat refinery project, but BPCL chairman announced in December that he hoped to invest $11 Billion in BPCL Andhra Pradesh refinery & petrochemical projects.

Separately, two sources from refineries said that projects would continue regardless of whether Aramco invested.

One of them said, "It depends on what Aramco proposes."

Aramco, the state-controlled oil company, wants to export its production or sell it in India in proportion to its stake.

"We want flexibility with crude procurement." "If we give them 30% stake they want to provide crude equivalent to 90% capacity, which is impossible," said the second refinery's source.

The exact size of the investment and the layout of the refineries were not available immediately.

A third source familiar with the situation said that Indian Prime Minister Narendra Modi will visit Saudi Arabia during the second quarter. The two countries are expected to try to reach a deal before the visit.

The Indian Foreign Ministry did reply to a comment request.

Aramco has been searching for opportunities to refine in India since a long time.

In 2018, it joined an Indian consortium to build a refinery and petrochemical plant in western India that can process 1.2 million barrels of oil per day. In 2019, it signed a nonbinding agreement to acquire a 20% stake in Reliance Industries’ oil-to-chemical business.

The huge refinery project was delayed due to difficulties in obtaining land, and the deal with Reliance fell through because of disagreements over valuation.

Hardeep Singh Puri, the Indian Oil Minister, announced in January that India was looking to build three refineries with a combined capacity of 400,000 barrels per day. Reporting by Nidhi verma. Shivam Patel and Yousef Sabah in Dubai contributed additional reporting. Mark Potter (Editing)

(source: Reuters)