Saudi Aramco and a consortium of Indian companies have signed a memorandum of understanding to develop a 1.2 million-bbl/d oil refinery and petrochemical complex at Ratnagiri, in western India.
The US$44-billion facility would be the largest of its kind in Asia, according to Wood Mackenzie. It would also be Saudi Aramco’s second largest globally, after Motiva in Texas.
It is a strategic partnership and significant milestone for India, noted Wood Mackenzie senior analyst Serena Huang. The country's oil demand is rising by 120,000 bbls/d annually over the next five years, she said, fast outpacing the average 45,000 bbl/d per year that the public sector is expected to expand over the same period.
“If India is to be self-sufficient, the need for new capacity to meet the growing demand in the longer term is clear,” Huang said.
“Adding a prominent crude producer as a partner provides long-term crude supply security and help with financing such a large-scale project.”
The greenfield refinery's integration with a petrochemical complex producing about 18 million tons per annum of chemical products also serves to meet the country's rising chemicals demand, she added.
“For Saudi Aramco, this could be its largest refining investment in Asia as well as its third consecutive one…The move brings the company one step further in its corporate strategy of raising its global refining capacity towards 10 million bbls/d to secure its crude disposition and diversify its portfolio by expanding its downstream assets.”