India-Saudi Arabia Oil Refinery Deal: Saudi Arabia will take a big step to make its place in India’s refining sector. This Muslim country will work with Indian companies to build two refineries in India. Earlier, Saudi Arabia had failed twice in this field. Saudi Arabia wants to make such decisions to secure its oil future. According to sources, the capacity of each refinery will be around 90 lakh tonnes per annum. Aramco may have to spend around Rs 18,000 crore for a 26% equity stake. After meeting PM Modi, both countries have agreed to develop business in India.
Saudi Arabia’s decision to work with India is important. Pakistan may have to suffer losses due to this in the future. Tensions have increased in the relations between India and Pakistan since the Pahalgam attack. Along with many countries, Saudi Arabia has also condemned this terrorist attack.
Talks Going On To Buy Up To 26% Stake
ET informed us in its October 2024 report that Bharat Petroleum Corporation (BPCL) and Oil and Natural Gas Corporation (ONGC) are discussing involving Saudi Arabia in their refinery projects. Both are in talks to buy up to a 26% stake by Aramco in the refinery projects. BPCL is preparing a report for its refinery-cum-petrochemical factory in Andhra Pradesh. This factory’s capacity can be 9-12 million tonnes per annum.
According to sources, the cost of a facility with a capacity of 9 mtpa could be around Rs 95,000 crore. PCL and its partner will have to invest Rs 33,000 crore in equity. If such a deal is done with ONGC, an investment of about Rs 18,000 crore may have to be made.
Why Has The Deal Not Been Done Till Now?
In 2018, Saudi Aramco signed a deal with Indian Oil, BPCL and HPCL – a group of state-run refiners – for a 50% stake in a 60 million tonnes per annum refinery-cum-petrochemical project in Maharashtra. Still, the project did not move forward due to difficulties in land acquisition. In 2019, Aramco agreed to buy a 20% stake in Reliance Industries’ oil-to-chemicals business for $15 billion. However, the deal was cancelled two years later due to disagreements over valuation.
