Saudi Aramco to Invest in Two New Indian Refineries
Overview
Saudi Aramco, the world’s leading oil producer, is in advanced talks to acquire a 20% stake in two upcoming refinery projects in India one located in Gujarat and the other in Andhra Pradesh. In addition to providing a steady market for its crude exports, this calculated action demonstrates the Saudi oil giant’s dedication to strengthening its relations with one of the global energy markets that are expanding at the fastest rate.
The two refinery projects under consideration are a part of India’s larger initiative to develop its petrochemical and refining infrastructure. India has been looking for strategic partners with financial clout and long-term crude supply agreements in light of rising domestic energy demands and a goal to become a global center for energy processing. Supported by the Saudi government, Saudi Aramco meets both requirements.
Andhra Pradesh: The Mega Plan of BPCL
The Andhra Pradesh refinery project is being led by Bharat Petroleum Corporation Limited (BPCL). About $11 billion, or ₹90,000 crore, would be spent by BPCL to build a greenfield refinery-cum-petrochemical complex. The planned project will have downstream petrochemical units and is anticipated to process 10 to 15 million tonnes of crude oil annually (MTPA).
Sources close to the matter say Aramco is keen on securing a 20% stake in the project. It has offered to provide up to three times the amount of crude oil as its ownership position in exchange; for example, a 20% equity share would equate to 60% of the refinery’s crude supply. This would give BPCL a steady supply source from a trustworthy partner in addition to guaranteeing a market for Aramco’s oil.
However, the amount of oil delivery that Aramco is requesting has raised concerns among Indian stakeholders. “They want to supply crude equal to 90% of the plant’s capacity if we give them a 30% stake,” stated a senior official in the Indian energy ministry. We must maintain our sourcing alternatives open because that limits our purchase freedom.
Gujarat: The Refinement Goals of ONGC
The Oil and Natural Gas Corporation (ONGC) is promoting the second refinery project, which is slated to be built in Gujarat. The Gujarat refinery, which is still in the design phases, is anticipated to have an integrated petrochemical component and be comparable in scale to the Andhra project.
To bring in both money and technology, ONGC has been negotiating with international investors. Aramco’s plan to integrate into India’s downstream industry would be consistent with its possible investment here. Building a top-notch complex that might eventually act as a center for the export of chemicals and processed fuels is part of ONGC’s plan.
The Broader India Strategy of Aramco
Saudi Aramco has long viewed India as a key market. In 2018, it partnered with a consortium of Indian state-owned oil companies to develop a $44 billion refinery project in Maharashtra, with an ambitious goal of producing 1.2 million barrels per day. Unfortunately, difficulties in acquiring land caused the project to halt.
Aramco and Reliance Industries then came to a non-binding agreement in 2019, according to which Aramco would invest $75 billion to acquire a 20% share in Reliance’s oil-to-chemicals (O2C) business. However, arguments over strategic fit and valuation ultimately led to the deal’s cancellation.
Despite these setbacks, Aramco has remained determined to enter the Indian refining market. If these new agreements go through, it would mark a significant milestone for Saudi Aramco’s operations in India.
Geopolitical and Strategic Consequences
In recent years, refiners in India have been expanding their sources of crude. Due to economic advantages, Russian imports have increased dramatically, while Middle Eastern supplies—especially those from Saudi Arabia—have somewhat decreased. Aramco would be able to secure long-term demand from one of the biggest and fastest-growing energy customers thanks to its equity participation in refineries in India.
During Indian Prime Minister Narendra Modi’s projected trip to Saudi Arabia in the second half of 2025, the agreements are also anticipated to be discussed. According to diplomatic sources, in order to send a clear message of bilateral cooperation, the Indian government is eager to gain a general grasp of these projects prior to the visit.
Conclusion
If successful, Aramco’s acquisition of a 20% stake in the proposed refineries in Andhra Pradesh and Gujarat will represent a win-win strategic partnership. It guarantees steady crude supply and much-needed foreign investment for India. It strengthens Aramco’s downstream footprint in Asia and provides it with a steady, quickly growing market. These collaborations are anticipated to be crucial in determining the direction of future energy cooperation between production and consumer countries, as the global energy market moves toward cleaner fuels and integrated petrochemicals.
The image added is for representation purposes only
