Govt shifts massive refinery projects to Gujarat, Andhra Pradesh amid Saudi energy talks

This decision comes amid with progress in discussions with Saudi Arabia to strengthen bilateral energy ties.

Oil and Natural Gas Corporation (ONGC) is expected to collaborate with Saudi Aramco for the Gujarat project.

At the same time, Bharat Petroleum Corporation Ltd (BPCL) is likely to lead the Andhra Pradesh refinery.

These facilities offer Saudi Arabia an opportunity to secure its position in India’s oil market, where its share in crude imports has been declining.

Talks are set to intensify ahead of Prime Minister Narendra Modi’s meeting with Saudi leaders next month, where discussions will revisit Saudi Arabia’s earlier commitment to invest $100 billion in India.

Progress on this pledge has been slow despite identifying sectors like railways, ports, and waterways for collaboration.

The Ratnagiri refinery faced delays due to local resistance to land acquisition and concerns over the feasibility of the initially planned 60-million-tonne mega refinery in partnership with Saudi Aramco and Abu Dhabi’s Adnoc.

These challenges have positioned Gujarat and Andhra Pradesh as more viable alternatives.

Gujarat, home to major refineries like Reliance’s Jamnagar and Indian Oil’s Vadodara facilities, is set to add another.

Meanwhile, Andhra Pradesh has sought a refinery since its 2014 bifurcation, with the state pushing for the Centre to fulfill its promise.

Maharashtra has faced criticism for losing major industrial projects to Gujarat, raising concerns about the state’s economic prospects.

Vedanta-Foxconn Semiconductor Project: A $20 billion project originally planned for Pune moved to Gujarat in 2022, triggering accusations of negligence by the Maharashtra government.

Tata-Airbus C-295 Aircraft Facility: Initially intended for Nagpur, this project was also relocated to Gujarat, intensifying claims of favouritism.

Although discussions are advancing, significant groundwork remains before the refinery projects in Gujarat and Andhra Pradesh can proceed.

“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.

Further, Saudi Arabia is seeking investment assurances through a revised bilateral investment treaty, a point of contention with India’s Finance Ministry. Alternative solutions are being explored in ongoing negotiations.

If realized, these projects could bolster India’s energy security and deepen ties with Saudi Arabia, a key oil exporter.

With growing domestic demand and refining capacity, these refineries aim to position India as a global energy hub, addressing both domestic needs and export opportunities.