 "Maharashtra loses out as Gujarat and Andhra secure Saudi-backed refineries")
The Union government is shifting its plans for two massive oil refineries, each with an annual capacity of 10-15 million tonnes and integrated petrochemical facilities, from Maharashtra’s Ratnagiri to Gujarat and Andhra Pradesh, according to The Times of India.
This move follows progress in talks with Saudi authorities to strengthen bilateral energy ties. While Oil and Natural Gas Corporation (ONGC) may partner with Saudi Aramco for the Gujarat refinery, Bharat Petroleum Corporation Ltd (BPCL) is expected to spearhead the project in Andhra Pradesh. The refineries present a strategic opportunity for Saudi Arabia to secure crude sales to India, as its share in India’s crude oil imports has declined over the years.
High-level talks and $100 billion promise
The discussions are expected to gain further momentum ahead of Prime Minister Narendra Modi’s meeting with Saudi leadership next month. The meeting seeks to revisit Saudi Arabia’s earlier commitment to invest $100 billion in India, which has seen sluggish progress despite the identification of key sectors like railways, ports, and waterways for Saudi involvement.
Why Ratnagiri was sidetracked
The Ratnagiri refinery project has faced significant hurdles, including resistance from locals over land acquisition. Additionally, industry experts voiced concerns over the feasibility of a 60-million-tonne mega refinery initially planned in collaboration with Indian Oil, HPCL, and BPCL, alongside partners Saudi Aramco and Abu Dhabi National Oil Company (Adnoc).
With delays plaguing Ratnagiri, Gujarat and Andhra Pradesh have emerged as more viable alternatives. Gujarat, already home to major refineries in Jamnagar (Reliance and Nyara Energy) and Vadodara (Indian Oil), is likely to gain another large facility. Andhra Pradesh, too, has been pushing for a refinery since the state’s bifurcation in 2014, with the N Chandrababu Naidu-led government urging the Centre to deliver on its promise.
Political implications of relocations
Maharashtra has seen several high-profile industrial projects being relocated to Gujarat, igniting political debates over the state’s economic prospects.
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Challenges ahead for Saudi-India collaboration
While the refinery projects in Gujarat and Andhra Pradesh remain under discussion, significant groundwork is required before implementation. “Oil refineries take time, and the two proposed projects will require more detailed work before we progress on them,” a source told The Times of India.
Saudi Arabia is also seeking investment assurances through a revised bilateral investment treaty, a sticking point with India’s Finance Ministry. Alternative arrangements to address this concern are under consideration as part of ongoing government-to-government negotiations.
If successful, these projects could strengthen India’s energy security as well as ties with Saudi Arabia, one of the world’s largest oil exporters. As India continues to expand its refining capacity, these refineries are expected to play a crucial role in meeting domestic and export demands, further cementing its position as a global energy hub.