NEW DELHI: The ambitious plan for a mega oil refinery in Maharashtra’s Ratnagiri seems to be faltering as the Indian government explores alternative sites in Gujarat and Andhra Pradesh for the project. Talks are progressing with Saudi Arabia to establish two refineries, each with a capacity of 10-15 million tonnes per year, along with integrated petrochemical facilities. These refineries are expected to help Saudi Arabia increase its crude oil exports to India, especially as its share of India’s oil imports has declined in recent years.
The refinery in Gujarat is set to involve a partnership between ONGC and Saudi Aramco, while BPCL will join forces with the Saudis for the Andhra Pradesh project. These discussions are seen as a key part of India’s efforts to tap into the promised $100 billion investment from Saudi Arabia, which has yet to materialize despite prior commitments. The refinery talks come ahead of Prime Minister Modi’s scheduled meeting with Saudi leadership next month.
The proposed Ratnagiri refinery, originally a top contender, has struggled due to slow progress in land acquisition and resistance from local communities. The scale of the project, designed to process 60 million tonnes of oil annually, also raised concerns. A preliminary agreement for this mega refinery had been signed by Indian Oil, Hindustan Petroleum Corporation Ltd (HPCL), and Bharat Petroleum Corporation Ltd (BPCL), with Saudi Aramco and Abu Dhabi National Oil Company (ADNOC) later joining the initiative.
Meanwhile, Gujarat, already home to large refineries in Jamnagar and Vadodara, looks set to add a fourth, while Andhra Pradesh is pushing for the completion of a refinery project initially proposed during the state’s bifurcation. The state government, led by N. Chandrababu Naidu, is keen to see the Centre fulfill its promise of an oil refinery.
While the details of the projects in Gujarat and Andhra Pradesh are still being worked out, the discussions are in advanced stages. However, officials caution that oil refineries are long-term projects that require extensive planning and time to implement. One source noted, “These projects are still in the discussion phase, and while some may proceed more quickly, oil refineries require more detailed planning before moving forward.”
Additionally, Saudi Arabia is seeking greater investment assurances through a revised bilateral investment treaty, an issue that has raised concerns within India’s finance ministry. However, some sources believe that the deal may be structured in a way that resolves these issues at the government-to-government level, bypassing traditional investment treaties.
