Saudi Aramco still considers India’s expanding crude oil refining and petrochemicals sector a key investment priority despite the energy behemoth’s failed attempts to acquire a stake in Reliance Industries (RIL) and the scrapped mega refinery complex in Ratnagiri (Maharashtra).
According to S&P Global Commodity Insights, India’s plan to set up new refineries has revived Saudi Aramco’s interest in investing in at least one of them and expanding its footprint in a growing oil and petrochemicals market.
“Although Aramco’s earlier plans to buy stakes in the planned Ratnagiri Refinery as well in Reliance fell apart in quick succession, the strategic move by two state-run firms, Bharat Petroleum Corp. and Oil and Natural Gas Corp., to build new refineries, will open another window of opportunity for Middle East’s biggest oil producer,” it added.
Priority investment
S&P Global said Aramco declined to comment on any specific investment plans, but has said that India remains a key investment priority for the company.
If a deal works out, the move will allow Saudi Arabia to raise its crude oil market share in India, where it was the third-largest supplier in 2024, behind Russia and Iraq, supplying 625,000 barrels per day (b/d), according to data from S&P Global Commodities at Sea.
Abhishek Ranjan, South Asia oil research lead at S&P Global Commodity Insights, said with Far East refineries facing pressure from lower margins and the threat of rationalisation, India’s expanding refining capacity would present an opportunity for Aramco.
“Any interest from Aramco in the BPCL and ONGC refineries will align with this strategic direction. If they get to obtain a successful partnership in any of these new refineries, Aramco cannot only ensure a steady supply of its crude, but will gain a substantial share of refinery output for sale in the Indian retail market,” he added.
India aims to boost refining capacity from 258.1 million tonnes per annum (mtpa) to 309.5 mtpa by 2028.
Capacity expansion by 2030s
S&P Global Commodity Insights estimates that beyond current plans for distillation capacity expansion, India will require an additional 400,000 b/d of hypothetical capacity by the early 2030s, indicating ample room for investment in one of the world’s major demand centres and fastest-growing economies, Ranjan projected.
“Despite India’s almost failed attempt to establish a world-scale refinery in Ratnagiri, where Aramco had planned to acquire a significant stake, the country remains committed to increasing its refining capacity,” he noted.
Aramco has been actively pursuing stable partnerships for its crude oil as part of its broader strategic goals, investing heavily in China and eyeing India as a pivotal market due to its burgeoning oil demand, Ranjan added.
In addition to the new refineries planned by India, Indian Oil Corporation (IOCL) is expanding its Panipat, Paradip, Gujarat, and Barauni refineries to increase their capacities and integrate petrochemical production units.
Bharat Petroleum Corporation (BPCL) is also expanding its Bina refinery in terms of crude processing capacity and increasingly integrating petrochemical production capacity.
HPCL Mittal Energy (HMEL) has also expanded its refinery capacity and integrated petrochemicals, increasing the petrochemical intensity to around 20 per cent.
HPCL Rajasthan Refinery is developing a 9 mtpa refinery and petrochemical project in Rajasthan, which would have a petrochemical intensity of around 26 per cent, one of the highest in India, S&P Global said.