In what could be one of biggest foreign investments in India’s petroleum sector, oil giant Saudi Aramco on Wednesday signed a memorandum of understanding to be a 50% partner in a $44-billion West Coast refinery and petrochemical project called Ratnagiri Refinery and Petrochemicals.
The refinery, slated to be India’s largest facility, is being planned by the country’s three state-run oil marketing companies — Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation. The upcoming refinery will have a capacity to process 1.2 million barrels of crude oil per day and is expected to produce around 18 million tonnes of petrochemical products every year.
“Large as this project may be, it does not by itself satisfy our desire to invest in India… We see India as a priority for investments and for our crude supplies,” Saudi energy minister Khalid al-Falih said at the 16th International Energy Forum here. “We’re very much interested in retail… We want to be consumer-facing,” he said.
Saudi Aramco will supply at least 50% of the crude to be processed at the planned refinery, he said. The company may also bring a partner for its share in the refinery later.
Falih added Saudi Aramco’s entry will bring lower cost of financing due to the company’s higher credit ratings.
The refinery project is currently facing some protest from the locals regarding land. However, B Ashok, who is heading the West Coast refinery, said all efforts are on and project is well on its course. The project is expected to be ready by 2025. The pre-feasibility study of the refinery has been completed and the project’s final configurations are being finalised.
“India has always been a priority destination for us. It’s geographically adjacent… It’s a large population with a large economy. I think more recently, the economy has really taken off. We have seen an inflection point into economic as well as energy demand and the companies have also grown to appreciate the values that Saudi Aramco and the kingdom bring in terms of reliability and consistency of energy supplies as well as the relationships that exist which are very important for the long-term sustainability of the businesses on both sides,” said Saudi Arabian energy minister added.