November 28, 2024 [Swarajya]- The Union government is shifting its plans for two large-scale oil refineries, originally proposed in Maharashtra’s Ratnagiri, to Gujarat and Andhra Pradesh. Each refinery will have an annual capacity of 10-15 million tonnes and integrated petrochemical facilities, according to The Times of India.
The proposed refinery in Gujarat will see a partnership between the Oil and Natural Gas Corporation (ONGC) and Saudi Aramco, while Bharat Petroleum Corporation Ltd (BPCL) is expected to collaborate for the project in Andhra Pradesh.
For Saudi Arabia, these projects provide an opportunity to secure a stable crude oil market in India, especially as the Gulf nation’s share in India’s oil imports has declined over the years.
The move comes ahead of Prime Minister Narendra Modi’s meeting with Saudi leaders next month. This interaction aims to accelerate Saudi Arabia’s earlier commitment to invest $100 billion in India, focusing on sectors such as railways, ports, and waterways. Progress on these investments has been slower than expected.
The Ratnagiri refinery project, once a key proposal under India-Saudi partnerships, faced significant delays due to challenges in land acquisition and resistance from local communities.
Additionally, there was scepticism about the feasibility of the initially proposed 60-million-tonne refinery, which involved Indian Oil, Hindustan Petroleum Corporation Limited (HPCL), BPCL, Saudi Aramco, and Adnoc.
The shift to Gujarat and Andhra Pradesh comes with strategic advantages. Gujarat, already home to major refineries in Jamnagar (Reliance and Nyara Energy) and Vadodara (Indian Oil), is poised to host a fourth refinery.
Meanwhile, Andhra Pradesh has long awaited an oil refinery, which was promised during the state’s bifurcation. The current NDA government, with Chandrababu Naidu as an ally, is under pressure to deliver on this commitment.
Saudi Arabia is leveraging these refinery projects to strengthen its economic ties with India. Alongside the refineries, discussions are underway to revise the bilateral investment treaty, enabling smoother Saudi investments in India.
While these refinery plans are in advanced stages of discussion, a government source indicated that the projects will require substantial groundwork and detailed planning before moving forward. “Oil refineries take time, and these two projects will need more detailed work before progressing,” the source added.
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