Bharat Petroleum Corporation Limited (BPCL) is in talks with Saudi Arabia for a crude oil deal for the company’s upcoming refinery in Andhra Pradesh, as part of the Middle-Eastern country’s investment plans in India, senior company officials told Moneycontrol.
BPCL will enter into a long-term deal of 15-20 years for supply of crude oil for the new refinery, if Saudi Arabia agrees to provide “good discounts” on purchase of oil for the refinery, said Vetsa Ramakrishna, Director- Finance, on the sidelines of India Energy Week 2025.
If the talks are successful, BPCL will dilute a 20-25 percent stake in the new refinery, forming a joint venture with Saudi Arabia. “We are in talks (with Saudi Arabia) and would go ahead if (the deal) is beneficial for us,” said Ramakrishna.
In 2019, Saudi Arabia signed a memorandum of understanding (MoU) with India and announced a plan to invest $100 billion in the country in sectors such as agriculture, infrastructure, manufacturing and energy. The investment plan, however, has not materialised yet.
The talks with Saudi Arabia are currently at a preliminary stage. “We are looking at it (partnering with Saudi). We can do the project on our own. Our balance sheet strength is good. It is, anyway, better to do it (set up a refinery) with a partner. Some partners will come, we will talk about it,” said G Krishnakumar, Chairman and Managing Director.
Moneycontrol in October had reported that Saudi Arabia is exploring investment opportunities in BPCL’s upcoming refinery. Bharat Petroleum currently operates three refineries in Mumbai, Kochi, and Bina in Madhya Pradesh and is setting up a new refinery in Andhra Pradesh to meet India’s rising energy demand.
Investment plans
Krishnakumar said the government of Andhra Pradesh is willing to provide capital subsidy of 75 percent to BPCL for the new refinery. The state government has also allotted 6,000 acres of land for BPCL’s refinery and petrochemical project, he added.
In December, BPCL’s board also approved Rs 6,100 crore for pre-project activities for the greenfield refinery-cum-petrochemical complex on the East Coast in Andhra Pradesh.
The company is currently working on the detailed feasibility report (DFR) for the project and an investment decision would be finalised after the study, said Krishnakumar. The DFR is expected to be completed by October 2025 while the commissioning of the refinery would take 45 to 54 months after securing all the required approvals, company officials said.
The expected capital expenditure for BPCL’s 9 million metric tonnes per annum (MMTPA) refinery is between Rs 95,000 crore to Rs 1 lakh crore. BPCL is planning a capex of Rs 19,000 crore to Rs 20,000 crore for the financial year 2025-26 (FY26), higher than the Rs 16,000 crore (current estimation) spent in the current fiscal (FY25), said Ramakrishna.
After the Oil Marketing Companies (OMCs) failed to set up a 60 MMTPA refinery in Maharashtra’s Ratnagiri, India’s oil minister Hardeep Singh Puri has said that the companies would instead build three smaller refineries of 20-25 MMTPA capacity, to avoid land acquisition issues.
As India aims to increase its refining capacity to 450 MMTPA by 2030 from around 250 MMTPA currently, the government has been focused on commissioning new oil refineries and expanding the capacity of existing ones.
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