Saudi investment call in BPCL, ONGC refineries likely in 7-8 months, bolstering India’s capacity expansion drive
Mumbai: Two state-run energy companies, Bharat Petroleum Corporation Limited (BPCL) and Oil and Natural Gas Corporation Limited (ONGC), are expected to finalise detailed feasibility reports (DFRs) for their planned greenfield refineries over the next seven to eight months. A final decision on Saudi Arabia’s potential investment in these projects will be taken once the reports are completed, a senior government official told Moneycontrol.
BPCL’s nine million metric tonne per annum (MMTPA) refinery is under development in Andhra Pradesh’s Nellore district, while ONGC’s facility is planned for Jamnagar district in Gujarat.
“It usually takes a year for companies to complete DFR. So, basically 7-8 months from now they should complete it and then a call on investment could be taken (by Saudi Arabia),” the official was quoted as saying by Moneycontrol.
According to the report, Indian state-run oil firms are negotiating with Saudi Arabia for a crude oil supply arrangement tied to the kingdom’s investment in upcoming refineries. The proposed deal would see Riyadh provide crude at discounted rates while also taking an equity stake in the projects.
Part of Riyadh’s $100 billion India investment plan
In 2019, Saudi Arabia signed a memorandum of understanding with India, outlining plans to invest $100 billion in sectors including energy, infrastructure, agriculture, and manufacturing.
The latest refinery proposals are viewed as a continuation of that strategy, though much of the earlier commitment remains unrealised.
India remains a major crude oil market for Saudi Arabia, which is currently the country’s third-largest supplier after Russia and Iran. As global demand softens and prices ease, Riyadh is seeking new oil deals to secure market share and boost exports. India’s consumption, however, continues to grow, bucking the global trend.
Refining expansion to meet rising fuel demand
The Indian government is working to expand refining capacity from the current 250 million metric tonnes per annum (mmtpa) to 450 mmtpa by 2030 to meet rising fuel demand.
An earlier plan to build a 60 mmtpa mega-refinery in Ratnagiri, Maharashtra, was abandoned over land acquisition hurdles.
Oil Minister Hardeep Singh Puri has since said that state-run oil marketing companies will instead develop smaller refineries with capacities of 20-25 mmtpa to avoid similar bottlenecks.
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