Saudi Aramco signs deal with Indian consortium for new refinery

Saudi Arabia’s state oil company Saudi Aramco has made an agreement with a consortium of Indian oil companies to develop a US$44bn refinery and petrochemicals facility despite protests from locals.

The preliminary deal was signed on 11 April in New Dehli between Saudi Aramco and state-owned oil companies The Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum, which would see Saudi Aramco owning a 50% stake in the facility, and the Indian companies holding the rest. The integrated refinery and petrochemicals facility will be built in Ratnagiri on the Konkan Coast in India.

Saudi Arabia has been increasing investments in foreign refineries in a bid to guarantee demand for its crude oil. Speaking at the International Energy Forum where the memorandum of understanding was signed, Saudi energy minister Khalid al-Falih said: "Large as this project may be, it does not by itself satisfy our desire to invest in India. We see India as a priority for investments and for our crude supplies".

Amin Nasser, Saudi Aramco president and CEO said: “The signing marks a significant development in India’s oil and gas sector, enabling a strategic joint venture and investment partnership that will serve India’s fast-growing demand for transportation fuels and chemical products.”

The development of the Ratnagiri Refinery and Petrochemicals Ltd (RRPCL) was first agreed upon by the three Indian oil companies in 2016. The refinery will have the capacity to process 1.2m bbl/d into products such as petrol and diesel, and will also provide feedstock for the petrochemicals facility that will be capable of producing 18m t/y.

However, locals have been opposing the project on the grounds that it will take away the livelihoods of farmers and fishermen, disturb the ecology, and expose the region to further industrial exploitation. According to a report from The Hindi, the people in the region are feeling betrayed, as the state industries minister Subhash Desai had previously stated that the project "will not be imposed on the locals in any circumstances". 

Satyajit Chavan, convener for the Committee for Opposing Destructive Projects in Konkan said: “The government has double standards and now stands exposed in front of the people of Konkan. The people have repeatedly voiced their opposition to the project, and despite this, the government is going ahead with it.”

Despite the protests, B Ashok, CEO of RRPCL said that plans are still underway to have the facility fully operational by 2025.