By:Moneycontrol

Saudi Arabia is exploring investment opportunities in an upcoming refinery of the state-run Bharat Petroleum Corp. Ltd (BPCL) as part of the West Asian country’s broader investment plans in India, a senior government official said.

BPCL is in the early stage of setting up a new refinery to meet the rising energy demand of the country. The refiner is currently in the process of finalising a location for the project.

“Technical discussions between them (BPCL and Saudi Arabia) are ongoing. Saudi Arabia is looking at greenfield and strategic petroleum reserve projects in India for investments,” the official said.

Queries sent to a spokesperson for BPCL remain unanswered at the time of publishing.

In 2019, Saudi Arabia signed a memorandum of understanding (MoU) with India and announced a plan to invest $100 billion in the country in sectors such as agriculture, infrastructure, manufacturing and energy. The investment plan, however, has not materialised yet.

India’s Petroleum Secretary Pankaj Jain, on September 29, met with Saudi’s energy ministers and officials from the country’s state-run oil and gas company Aramco in Riyadh. Jain said the discussions were around bilateral issues and cooperation in the oil and gas sector, according to his posts on social media platform X.

The government has been pushing to increase the country’s refining capacity and commission new oil refineries to meet rising domestic demand. After the OMCs failed to set up a 60 MMTPA refinery in Ratnagiri in Maharashtra, India’s oil minister Hardeep Singh Puri, in May 2023, said the country needs to set up smaller refineries to avoid issues such as land acquisition.

In June, the Economic Times reported that BPCL is planning to set up a 12 MMTPA (million metric tonnes per annum) refinery at an estimated cost of Rs 50,000 crore. Oil minister Puri later confirmed BPCL plans to set up greenfield refineries but did not comment on the new facility’s timeline and location, saying it was too early to provide details.

BPCL is looking at locations in Andhra Pradesh after Chief Minister Chandrababu Naidu held talks with the company for setting up the refinery in the state, according to media reports. Moneycontrol earlier reported that the company is also looking at Uttar Pradesh’s Prayagraj for the refinery.

Bharat Petroleum currently operates three refineries in Mumbai, Kochi, and Bina in Madhya Pradesh. About the company’s expansion plans, Chairman and Managing Director, G Krishnakumar, has earlier said that BPCL plans to invest Rs 1.7 lakh crore over the next five years in the core oil refining, fuel marketing, petrochemical, and clean energy businesses.

Of the total investment, the company has earmarked Rs 75,000 crore for refineries and petrochemicals, Rs 8,000 crore for pipeline projects, and Rs 20,000 crore for its marketing business. BPCL has planned an investment of Rs 25,000 crore for its gas business, Rs 10,000 crore for green energy, and Rs 32,000 crore in upstream production, mainly in Mozambique and Brazil.

Refining capacity

Other oil marketing companies have also announced new refinery plans. State-run Hindustan Petroleum Corp. Ltd (HPCL), in 2023, announced the setting up of a new oil refinery in Rajasthan’s Barmer with a capacity of nine MMTPA, which is expected to be commissioned in January 2025.

Meanwhile, Indian Oil Corp Ltd (IOCL), which has the largest refining capacity in the country, is also expanding the capacity of its refinery in Panipat, Haryana, to 25 MMTPA, from 15 MMTPA.

Amid rising energy demand, India aims to increase its refining capacity to 450 MMTPA by 2030 from around 250 MMTPA currently.