The recent shift of significant refinery plans from Maharashtra to Gujarat and Andhra Pradesh highlights the dynamic relationship between Saudi Aramco and India’s energy sector. Originally slated for Maharashtra’s Ratnagiri district, the ambitious project now involves the establishment of two oil refineries with capacities between 10 to 15 million tonnes each. This plan aims to integrate petrochemical facilities, as reported by The Times of India.
The transitioning of these refinery projects was not spurred by mere logistical or geographical factors; it's deeply intertwined with Saudi Arabia's intention to secure its share of India's crude oil market. Over the years, the Gulf nation has seen its stake in India’s oil imports dwindle, prompting this strategic move to stabilize and expand its presence.
Under the new partnerships, the Oil and Natural Gas Corporation (ONGC) will be collaborating with Saudi Aramco for the Gujarat refinery, whereas Bharat Petroleum Corporation Ltd (BPCL) will be involved with Andhra Pradesh. This marks not only a redistribution of the oil refining capacity within India but also speaks volumes about the shifting tides of investment priorities.
Prime Minister Narendra Modi's upcoming meeting with Saudi leaders is expected to accelerate discussions surrounding Saudi Arabia’s earlier commitment to invest $100 billion across various sectors within India. This includes railways and ports, and it appears these plans have progressed more slowly than originally anticipated.
Why the sudden detour from Ratnagiri? The Ratnagiri refinery project was initially touted as one of the key proposals under the burgeoning India-Saudi partnership. Yet, persistent delays from local communities alongside land acquisition challenges rendered the project unfeasible. There were doubts on whether the proposed 60-million tonnes capacity — which would have involved not just Saudi Aramco but also Indian Oil, Hindustan Petroleum Corporation Limited (HPCL), and Adnoc — could actually come to fruition.
The refineries' new locations, Gujarat and Andhra Pradesh, come with strategic advantages. Gujarat, known for housing major refineries like Reliance's Jamnagar and Indian Oil’s Vadodara, stands poised to welcome another major oil processing facility. This could bolster the state’s position as a refining hub. On the other hand, Andhra Pradesh, which has long awaited new refining capabilities following its bifurcation, is on the cusp of finally seeing this commitment fulfilled, especially under the current National Democratic Alliance (NDA) government.
Saudi Arabia aims to leverage these refinery projects to solidify its economic ties with India, emphasizing the need to revise existing bilateral investment treaties to facilitate smoother investment flows. While these refinery plans are reportedly far along in discussions, sources within the government caution there's still considerable groundwork and detailed planning required.
"Oil refineries take time, and these two projects will need more detailed work before moving forward," said one government source, underlining the complex nature of transforming these plans from blueprints to operational entities.
This factory shift is indicative of larger economic negotiations occurring at the diplomatic level and signifies both countries' commitment to strengthening their energy partnership amid global oil market fluctuations. The future of these refinery projects could act as a bellwether for how effectively these discussions translate to tangible benefits for both nations.
