Saudi Aramco Sets Its Sights on Indian Refineries: Exciting Investment Opportunities Ahead

Saudi Aramco is looking to invest in two new refineries in India. This move aims to secure a steady market for its oil in a rapidly growing country. India is the third-largest consumer of oil in the world and wants to boost its refining capacity as Western countries move toward cleaner energy solutions.

Recently, Aramco has been in discussions to invest in Bharat Petroleum Corp (BPCL) in Andhra Pradesh and a proposed refinery by Oil and Natural Gas Corp (ONGC) in Gujarat. Both BPCL and ONGC are state-run companies. BPCL’s chairman mentioned that the company plans to invest around $11 billion in its Andhra project. However, ONGC’s refinery plans are still in early stages.

Saudi Arabia’s share of India’s oil imports has recently dropped. Indian refiners have been diversifying their sources, often opting for cheaper crude from places like Russia. Even so, the refinery projects should continue, regardless of Aramco’s involvement.

Aramco’s proposal is quite ambitious. They are suggesting to supply oil equivalent to three times the stake they might hold in each refinery. For instance, if they took a 30% stake, they’d want to provide crude that matches 90% of the refinery’s capacity. This request has raised some eyebrows, with sources questioning its feasibility.

Looking ahead, Indian Prime Minister Narendra Modi plans to visit Saudi Arabia soon. It’s hoped that a deal could be made before this visit. This potential investment is part of Aramco’s long-standing interest in India’s refining sector. Back in 2018, they tried to join forces with local companies for a massive refinery project, but faced delays and other issues that halted progress.

Investing in these Indian refineries fits into a larger trend. According to the International Energy Agency, global oil demand is expected to continue rising through the 2020s, particularly in emerging markets like India.

Saudi Aramco’s exploration of refining opportunities isn’t new. In 2019, they signed a non-binding agreement to invest in Reliance Industries, but that did not materialize due to disagreements on valuation. With India’s appetite for oil only expected to grow, both parties stand to gain from successful collaborations in the future.

For more on energy trends, you can visit the International Energy Agency’s website.

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Saudi Aramco, ONGC, Indian sources, BPCL, India, Saudi Arabia, refineries