Saudi Arabia will work with Indian companies to build two oil refineries in India. This move comes after Saudi Arabia faced two failures in the Indian refining sector earlier.
Now, it wants to secure the future of its oil business. According to reports, each refinery will have a capacity of about 9 million tonnes per year. Saudi company Aramco may have to invest nearly Rs 18,000 crore for a 26% stake in each refinery. After a meeting between Prime Minister Narendra Modi and Saudi Crown Prince Mohammed bin Salman in Jeddah, both countries agreed to set up these refineries.
This decision is very important for Saudi Arabia and India, especially at a time when relations between India and Pakistan are tense after the Pahalgam terror attack. Saudi Arabia also strongly condemned the attack. Experts believe this deal will not only strengthen India’s energy security but also boost its geopolitical strength.
In October, it was reported that Bharat Petroleum Corporation Limited (BPCL) and Oil and Natural Gas Corporation (ONGC) were in talks to bring Aramco as a partner in their separate refinery projects. Aramco is negotiating to buy up to a 26% stake in both projects.
BPCL is preparing a report for a refinery-cum-petrochemical plant in Andhra Pradesh, which could have a capacity of 9-12 million tonnes per year. The project may cost around Rs 95,000 crore. BPCL and its partners would need to invest about Rs 33,000 crore in equity, while Aramco’s 26% share would cost about Rs 9,000 crore, according to reports.
ONGC is also planning a similar project, possibly in Uttar Pradesh, near Prayagraj. Talks are still at an early stage. ONGC is willing to offer 20-49% stake, but Aramco prefers to keep it at 26% or less.