Saudi Aramco ‘looks to invest in two oil refineries in India’

Saudi Aramco is in talks to invest in two planned refineries in India as the world’s top oil exporter looks for a stable outlet for its crude in the world’s fastest-growing emerging market, several Indian sources with direct knowledge of the matter said.

India, the world’s third-biggest oil consumer and importer, wants to become a global refining hub as Western companies cut crude processing capacity in their shift to cleaner fuels.

Aramco is in separate talks to invest in Bharat Petroleum Corp’s (BPCL) planned refinery in the southern state of Andhra Pradesh and a proposed Oil and Natural Gas Corp (ONGC) refinery in western Gujarat state, the sources said.

Aramco, BPCL and ONGC did not immediately respond to requests for comment.

Both Indian firms are state-controlled. While ONGC’s Gujarat refinery plans are at a nascent stage, BPCL’s chairman said in December that it aimed to invest $11 billion in its Andhra Pradesh refinery and petrochemical project.

Two refinery sources said separately that the projects would proceed regardless of whether Aramco invests.

“It all depends on the proposal that Aramco gives,” one of them said.

Sources said state-controlled Aramco proposes to supply oil equivalent to three times its stake in each project, and wants to sell its share of production either in India or by export.

“We want flexibility in crude procurement. If we give them 30 per cent stake, they want to supply crude equivalent to 90 per cent of the capacity, which is not possible,” the second refinery source said.

Other details, including potential investment size and the configuration of the planned refineries, were not immediately available.

Indian Prime Minister Narendra Modi plans to visit Saudi Arabia in the second quarter, and the two countries will attempt to reach an agreement before the visit, said a third source with knowledge of the matter.

India’s foreign ministry did not respond to a request for comment.

Aramco has long been scouting for refining opportunities in India.

In 2018 it joined a consortium of Indian companies to build a 1.2 million barrels per day refinery and petrochemical project in western India and in 2019 it signed a non-binding agreement for a 20 per cent stake in Reliance Industries’ oil to chemical business.

However, the huge refinery project has been delayed by difficulties over procuring land and the deal with Reliance was called off due to differences over valuation.

In January, Indian Oil Minister Hardeep Singh Puri said India would look to set up three refineries of 400,000 bpd each.

Saudi Arabia’s share of India’s oil imports has declined as refiners that have invested billions of dollars in upgrading their plants diversify crude sources to tap cheaper alternatives, including from Russia.

Meanwhile Saudi oil giant Aramco has launched a pilot direct air capture unit able to remove 12 tonnes of carbon dioxide per year from the atmosphere, it said on Thursday.

The facility, developed with Siemens Energy, is Saudi Arabia’s first carbon dioxide direct air capture (DAC) unit and will be used to test CO2 capture materials, Aramco said.

“The test facility launched by Aramco is a key step in our efforts to scale up viable DAC systems, for deployment in the Kingdom of Saudi Arabia and beyond,” Ali A Al-Meshari, Aramco senior vice president of technology oversight and coordination, said in Aramco’s statement.

“In addition to helping address emissions, the CO2 extracted through this process can in turn be used to produce more sustainable chemicals and fuels.”

Aramco, the world’s top oil exporter, aims to reduce its so-called Scope 1 and 2 emissions to net zero by 2050.

Aramco announced the pilot DAC unit with Siemens Energy in October 2023 and said at the time it would be completed in 2024 and was intended to pave the way for a larger pilot plant that would have the capacity to capture 1,250 tonnes of CO2 per year.

The state oil giant in December signed an agreement with oil services firms SLB and Linde to build a carbon capture and storage project in Jubail, Saudi Arabia.

The first phase is expected to be completed by the end of 2027, capturing and storing up to 9 million tonnes of CO2 a year.

Aramco has signed several other agreements to explore carbon capture development and last year took part in an $80 million funding round of Los Angeles-based CarbonCapture.

Meanwhile Saudi Aramco has agreed to buy fuel distributor Primax, which has operations in Peru, Colombia and Ecuador, Peruvian newspaper Gestion reported late on Thursday, citing sources familiar with the deal.