Saudi Arabia’s Refinery Investments in India Stall Over Crude Supply Terms
Saudi Arabia’s ambitious plans to invest in two major oil refinery projects in India have hit a roadblock, with negotiations stalling over crude supply pricing and volume, sources familiar with the matter revealed.
The refinery projects, involving Bharat Petroleum Corporation Ltd. (BPCL) and Oil and Natural Gas Corporation (ONGC), were part of a broader strategy by Saudi Aramco to expand its downstream presence in fast-growing markets such as India and Southeast Asia. However, early-stage talks have been delayed as Saudi officials push to supply 50% of the required crude at official selling prices (OSPs) — typically higher than market rates.
In contrast, Indian stakeholders are demanding that Saudi Arabia’s crude contribution align more closely with its proposed 20% equity stake, and that it be offered at a discount to OSPs, sources said on condition of anonymity.
Neither the Indian oil ministry nor the project partners responded to requests for comment. Saudi Aramco also declined to issue an immediate statement.
The standoff highlights a growing oil supply negotiation gap. While Saudi Aramco aims to secure demand for its crude during times of market volatility, Indian refiners are cautious about locking into long-term, above-market pricing — especially when cheaper Russian oil continues to dominate India’s import mix.
Saudi Arabia has seen its market share in India shrink in recent years due to discounted alternatives. A failure to finalize the refinery projects would also damage the diplomatic momentum established when Crown Prince Mohammed bin Salman pledged $100 billion in investments in India during a 2019 visit. Only around 10% of that commitment has been realized to date.
Past efforts, including a $60 billion mega-refinery with Abu Dhabi National Oil Co. (ADNOC) and Indian state firms, failed due to land acquisition hurdles. Similarly, plans for a 20% stake in Reliance Industries’ oil-to-chemicals business were also scrapped.
The current proposals include:
- BPCL’s East Coast refinery and petrochemical complex
- ONGC’s refinery project in Gujarat
- A potential 15% stake in Indian Oil Corp.’s Panipat refinery
Indian refiners argue they can easily finance the projects locally without giving up equity unless crude pricing terms are favorable.
As global energy dynamics shift, the stalled talks highlight the strategic balancing act between securing long-term supply and ensuring economic viability in energy partnerships.
also see