A massive refinery complex to be built on the western coast of India by Saudi Aramco and Abu Dhabi National Oil Company is expected to cost as much as $70 billion, nearly twice the amount initially estimated.
The 1.2 million barrels-per-day greenfield integrated refinery and petrochemicals complex being planned in the Maharashtra state will be supplied with 600,000 bpd of Saudi crude, UAE state news agency Wam said in a statement. The refinery plans were part of several investment pledges made during the visit of Saudi Crown Prince Mohammed bin Salman to the UAE capital.
The planned downstream investment is part of an increasing interest in India’s refining sector as both majors and state-backed players look to supply crude to refinery assets in one of the few places with growing demand for the commodity.
India's petroleum minister Dharmendra Pradhan revised upwards the cost of the refinery to more than the initial estimate of $44bn last month.
The scheme, which is currently in its land acquisition phase, is being jointly developed alongside domestic refiners Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum.
The Gulf firms will have a 50 per cent stake in the Ratnagiri project, which is expected to have a chemicals capacity of 18 million tonnes annually.
Saudi Aramco also plans to acquire what is currently the world's largest refinery at Jamnagar in India's western Gujarat state as the national oil company looks to secure demand for its crude.
India, Asia's third-largest economy, accounted for 5.8 per cent of global consumption of oil in 2018, with only China and the US consuming more. While demand for crude has been slowing globally, India has been one of the few hotspots, with demand expected to grow by more than 4 per cent annually to 2030, according to Indian refiner Nayara Energy.
Indian refining capacity is also expected to face a shortage of around 3.5-4 million bpd in the future, according to consultancy Wood Mackenzie, with India’s state-backed refiners tasked with bridging the gap by courting billions of dollars of foreign investment.
During the royal visit, Abu Dhabi and Riyadh also announced intentions to float a digital currency initially between banks, revealed plans for a joint tourism visa as well as improving efforts to reduce cyber attack response times from 24 hours to 6 hours.