Saudi Aramco, the world’s leading oil firm, is exploring investments in two planned refineries in India. This move aims to secure future crude sales in Asia’s top markets.
Indian state-owned refiners aim to build several new crude processing plants. This initiative responds to soaring demand for fuel and petrochemicals in India, the world’s third-largest crude oil importer. With demand continuing to rise, India has become a key player, even surpassing China in driving demand growth.
Fortifying Crude Supply
The Kingdom seeks to secure long-term sales of its crude oil in Asia’s competitive markets. The region, particularly India, will fuel future global demand growth. However, Aramco already collaborates with multiple Chinese refiners and petrochemical producers. Recently, the Saudi oil giant has aggressively pursued international expansion, especially in Asia’s high-demand centers. However, Saudi Aramco now targets investments in India’s new refineries. The company plans to supply crude volumes equivalent to three times its future stake in each project, as reported by Reuters.
Moreover, Aramco is exploring partnerships with Bharat Petroleum Corporation Ltd. (BPCL) for an $11 billion refining complex in southern India. Additionally, it engages in separate discussions with Oil and Natural Gas Corporation Limited (ONGC) regarding a proposed refinery on India’s western coast in Gujarat.
Challenges Ahead
Despite these opportunities, Indian refiners seek cheaper crude and diversified supply sources. Therefore, the Saudi proposal to supply a significant portion of the oil for the new refineries might face challenges. BPCL’s refinery project is currently more advanced, with preliminary work already underway, including land acquisitions.
For years, Saudi Aramco has worked to explore downstream opportunities in India. The oil giant previously attempted to form partnerships with private refiner Reliance Industries, but negotiations did not succeed. As Saudi Aramco continues its pursuit of growth in India, the outcome of these discussions will shape its future in one of the world’s most dynamic energy markets.
