Saudi Aramco is in discussions to invest in two planned refineries in India as it seeks a steady outlet for its crude in one of the world’s fastest-growing economies. India, the third-largest oil consumer, aims to become a global refining hub while Western nations reduce crude processing capacity to shift toward cleaner energy sources.
Declining Saudi Share in India’s Oil Imports
Despite being a key oil supplier, Saudi Arabia’s share in India’s crude imports has declined. Indian refiners have invested billions to upgrade their facilities and are increasingly sourcing cheaper alternatives, including Russian oil.
Planned Investments in BPCL and ONGC Refineries
Aramco is in talks with Bharat Petroleum Corporation Ltd (BPCL) to invest in its planned refinery in Andhra Pradesh and with Oil and Natural Gas Corporation (ONGC) for a refinery project in Gujarat. While ONGC’s refinery plans are still in early stages, BPCL has already announced a $11 billion investment for its Andhra Pradesh project.
Projects Moving Forward With or Without Aramco
According to refinery sources, the projects will proceed regardless of Aramco’s involvement. “It all depends on the proposal Aramco gives,” said one source. Aramco is proposing to supply oil equivalent to three times its stake in each project and either sell its share of production within India or export it. However, Indian refiners are concerned about maintaining flexibility in crude sourcing.
India-Saudi Deal Expected Before Modi’s Visit
Indian Prime Minister Narendra Modi is scheduled to visit Saudi Arabia in the second quarter of this year. Both countries are working to finalize an agreement before the visit. India’s foreign ministry has not commented on the ongoing discussions.
Aramco’s Previous Efforts in Indian Refining
Aramco has long been interested in investing in India’s refining sector. In 2018, it joined a consortium for a 1.2 million barrels per day (bpd) refinery project in western India. In 2019, it signed a non-binding agreement for a 20% stake in Reliance Industries’ oil-to-chemical business. However, both deals faced obstacles—land acquisition issues delayed the large refinery project, and the Reliance deal was scrapped over valuation differences.
India Expanding Refining Capacity
India continues to expand its refining infrastructure. Earlier this year, Oil Minister Hardeep Singh Puri announced plans to develop three new refineries with a capacity of 400,000 bpd each. These efforts align with India’s goal of strengthening its energy security and becoming a major global refining hub.
