Saudi Arabia’s $100-Billion Investment Strategy Includes New Refinery Project with BPCL

Saudi Arabia is actively seeking investment opportunities in an upcoming refinery being developed by Bharat Petroleum Corporation Limited (BPCL). This initiative is part of Saudi Arabia’s broader investment strategy in India, as confirmed by a senior government official.

Overview of the Investment Discussions

BPCL is currently in the early stages of establishing a new refinery to address the increasing energy demands in India. The company is in the process of selecting a suitable location for this project. Technical discussions between BPCL and Saudi Arabia are ongoing, focusing on potential investments in greenfield projects and strategic petroleum reserves.

Key Highlights:

• Investment Focus: Saudi Arabia is exploring investments in BPCL’s new refinery, which aligns with its plan to invest $100 billion in India across various sectors, including agriculture, infrastructure, manufacturing, and energy.
• Current Status: Queries sent to BPCL for comments on the negotiations remain unanswered.

Historical Context of Saudi Investments in India

In 2019, Saudi Arabia signed a memorandum of understanding (MoU) with India, announcing a significant investment plan. However, the execution of this investment strategy has faced delays.

Recent Developments:

• Bilateral Talks: On September 29, India’s Petroleum Secretary, Pankaj Jain, met with Saudi energy ministers and representatives from Aramco in Riyadh to discuss cooperation in the oil and gas sector.
• Refinery Expansion Plans: The Indian government is actively working to enhance the country’s refining capacity to meet domestic demands.

BPCL’s Refinery Project

Following the failure of public sector oil marketing companies to establish a 60 MMTPA refinery in Ratnagiri, Maharashtra, the Indian government has expressed the need for smaller refineries to avoid complications such as land acquisition.

Planned Refinery Details:

• Capacity: BPCL plans to set up a 12 MMTPA refinery at an estimated cost of ₹50,000 crore.
• Locations Considered:
  • Andhra Pradesh, following talks with Chief Minister Chandrababu Naidu.
  • Prayagraj in Uttar Pradesh.

BPCL’s Future Investment Plans

Bharat Petroleum operates three refineries located in Mumbai, Kochi, and Bina (Madhya Pradesh). The company’s Chairman and Managing Director, G. Krishnakumar, stated that BPCL plans to invest ₹1.7 lakh crore over the next five years in various sectors.

Investment Allocation:

• Refineries and Petrochemicals: ₹75,000 crore
• Pipeline Projects: ₹8,000 crore
• Marketing Business: ₹20,000 crore
• Gas Business: ₹25,000 crore
• Green Energy: ₹10,000 crore
• Upstream Production: ₹32,000 crore (primarily in Mozambique and Brazil)

Broader Refining Capacity Plans

Other oil marketing companies are also expanding their refining capacities:

• HPCL: Announced plans for a new oil refinery in Barmer, Rajasthan, with a capacity of 9 MMTPA, expected to be commissioned in January 2025.
• IOCL: The largest refiner in India is expanding its Panipat refinery capacity from 15 MMTPA to 25 MMTPA.

National Goals:

In response to increasing energy demands, India aims to boost its refining capacity to 450 MMTPA by 2030, up from approximately 250 MMTPA currently.

Saudi Arabia’s discussions with BPCL represent a significant step in fostering international investment in India’s energy sector. As both nations collaborate on refining projects, this partnership could play a pivotal role in meeting India’s growing energy needs and enhancing its refining capabilities.