Saudi Arabia and India agree to set up 2 Oil Refineries
JEDDAH : Saudi Arabia and India agreed to deepen energy ties and cooperate more closely on a wide range of industries including defence, tourism and culture, as they seek to strengthen their economies at a time of global turbulence.
Indian PM Shri Narendra Modi met HRH Saudi PM Mohammed bin Salman in Jeddah on 22 April, as part of the India–Saudi Arabia Strategic Partnership Council.
Saudi Arabia in 2019 had pledged to invest $100bn in India in multiple areas including energy, petrochemicals, infrastructure, technology, fintech, digital infrastructure, telecommunications, pharmaceuticals, manufacturing and health.
The government did not disclose further details, but industry sources said that one of the two refineries might be Indian state-run BPCL’s planned refinery in Andhra Pradesh, which Saudi Arabia’s state-controlled Saudi Aramco may join as an investor. The other one might be a refinery in Gujarat, under a partnership with Indian upstream firm ONGC and Aramco.
But plans for a 1.2mn b/d refinery in Ratnagiri in collaboration with IOC and Adnoc have mostly been ruled out, because of logistical issues relating to the size of the refinery and land acquisition hurdles, among others.
Saudi Arabia is the third-largest crude supplier to India, making up 15pc or 712,000 b/d of India’s total imports in January-March, data from oil analytics firm Vortexa show. Saudi Arabia’s share in the Indian market has declined, after Russia became India’s biggest supplier following its war with Ukraine.
Modi’s trip to the Middle East comes close on the heels of US vice president JD Vance’s visit to India on 21 April. The visit included negotiations for an India-US bilateral trade agreement and efforts towards enhancing co-operation in energy, defence, strategic technologies and other areas.
The countries committed to establish two oil refineries in India and collaborate on everything from petrochemicals to electricity, renewable energy and climate policy, according to a joint statement Wednesday, which didn’t provide extensive details. They’re also aiming to complete negotiations on a bilateral investment treaty “at the earliest”.
India and Saudi Arabia’s leaders met as both countries look to support their economies in the face of wide-ranging US tariff policies that threaten to stunt growth. India is already facing its slowest economic expansion in four years and Saudi Arabia is forecast to come under renewed pressure from subdued oil prices.
Deeper ties would stand to bolster stability and energy security for both, though there was too little detail in Wednesday’s statements on concrete deals. The Saudi crown prince had in 2019 pledged US$100 billion (RM439.30 billion) of investments in India, about US$10 billion of which has materialised. At Tuesday’s meeting, both leaders agreed to increase visits of business and trade delegations and hold trade and investment summits to facilitate more cross-border flows.
State-owned oil behemoth Saudi Aramco, which has long sought entry into India’s refining sector, wasn’t mentioned in the official communications. It’s unclear if the company will be part of India and Saudi Arabia’s latest announcement on the two refineries.
The countries agreed to pursue deeper cooperation on the supply of crude and liquefied petroleum gas and said they’d work together on India’s strategic oil reserve program.
Saudi Arabia, the de facto leader of the Opec+ producer group, was once India’s largest oil supplier but has seen its share of the market decline as imports from Russia and Iraq increase.