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Saudi Aramco plans to invest in Indian refineries to expand crude oil export channels in emerging markets.

Cailian Press 2025-03-28 20:44:36

It is reported that Saudi Aramco plans to invest in two under-construction refinery projects in India to expand its crude oil export channels.

The two proposed investment projects are located in Andhra Pradesh and Gujarat, respectively, and are led by Bharat Petroleum Corporation and Indian Oil and Natural Gas Corporation.

According to reports, Saudi Aramco hopes to supply crude oil at three times the scale of its stake in the project, but India hopes to maintain flexibility in crude oil procurement.

According to sources, oil giant Saudi Aramco is planning to invest in two under-construction refinery projects in India, hoping to establish a stable crude oil export channel in this rapidly growing emerging market.

As one of the world's major oil-consuming and importing countries, India is striving to establish itself as a global refining hub. In the context of Western countries transitioning to clean energy and continuously reducing refining capacity, India hopes to enhance its position in the global energy industry chain.

At the same time, as Indian refineries upgrade and diversify their crude oil sources, they are turning to more price-advantageous oil-supplying countries, including Russia, resulting in a decrease in Saudi Arabia's share of crude oil imports in India.

According to reports, Saudi Aramco is in discussions with two Indian state-owned enterprises—Bharat Petroleum Corporation Limited (BPCL) and Oil and Natural Gas Corporation (ONGC)—regarding two planned refinery projects, with the former located in southern Andhra Pradesh and the latter situated in western Gujarat.

Among them, ONGC's project is still in the early planning stage, while BPCL's related projects have already initiated preliminary work, including land acquisition in Andhra Pradesh, with plans to build a petrochemical refining complex with an annual output of no less than 9 million tons.

According to BPCL's introduction, the petrochemical portion of the project will account for 35%, with an estimated total investment of 900 billion to 950 billion rupees (approximately 10.5 billion to 11.1 billion US dollars).

Although Saudi Aramco intends to invest, two people familiar with the project said that these projects will continue to advance regardless of their participation. One person stated, "Whether to accept Saudi Aramco's investment depends on the specific proposal they put forward."

Informed sources reveal that Saudi Aramco hopes to supply crude oil at three times the scale of its share in the project and to decide on its own whether the produced portion will be sold in India or exported.

A refinery person stated, "We hope to maintain flexibility in crude oil procurement. If they only hold 30% of the shares but demand crude oil equivalent to 90% of the refinery's production capacity, this is unacceptable to us."

The investment scale of the project and details such as refinery configuration have not yet been disclosed.

A knowledgeable source said that Indian Prime Minister Modi plans to visit Saudi Arabia in the second quarter of this year, and the two countries are seeking to reach relevant agreements before then. The Indian Ministry of External Affairs did not respond to this.

Saudi Aramco has been seeking opportunities to expand its market share in India's refining sector.

In 2018, Saudi Aramco collaborated with a consortium of several Indian state-owned companies, including Hindustan Petroleum Corporation and BPCL, to build a refining and petrochemical complex (RRPCL) in Maharashtra, India, with an expected processing capacity of up to 1.2 million barrels of crude oil per day. In 2019, Saudi Aramco signed a non-binding agreement with Reliance Industries Limited to acquire a 20% stake in its oil and gas chemical business.

Due to land acquisition issues, the progress of the RRPCL project has been slow; and the equity cooperation with Reliance has also been ultimately put on hold due to differences in valuation between the two parties.

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Saudi Aramco plans to invest in Indian refineries to expand crude oil export channels in emerging markets.

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