Saudi Arabia, India agree to set up two oil refineries

PM Narendra Modi with Saudi Crown Prince Mohammed bin Salman in Jeddah. (Courtesy: Bloomberg)

Saudi Arabia and India agreed to deepen energy ties and pursue closer cooperation in areas like tourism and technology as the countries seek to strengthen relations at a time of turbulence for the global economy.

An accord was reached to establish two oil refineries in India through a joint venture between the countries, India’s Ambassador to Saudi Arabia Suhel Ajaz Khan said in a briefing, without giving more details.

The developments come after Saudi Crown Prince Mohammed bin Salman and Prime Minister Narendra Modi met in Jeddah on Tuesday night. India’s leader departed shortly after, rather than staying in the kingdom until Wednesday, following one of the worst attacks on civilians in Jammu and Kashmir in years.

India and Saudi Arabia’s leaders met as both countries look to support their economies in the face of wide-ranging US tariff policies that threaten to stunt growth. India is already facing its slowest economic expansion in four years and Saudi Arabia is forecast to come under renewed pressure from subdued oil prices.

Deeper ties would stand to bolster stability and energy security for both and follow on years of flirtation between the G-20 nations on partnerships for everything from oil to agriculture and technology.

Saudi Crown Prince MBS had in 2019 pledged $100 billion of investments in India, but only about $10 billion of that has materialized. State-owned oil behemoth Saudi Aramco has also long sought entry into India’s refining sector with little success.

A plan to jointly build a mega complex in western India, for example, hasn’t come to fruition due to challenges over land and a proposal for a stake in Reliance Industries Ltd.’s mega refinery in Gujarat failed to fructify on valuation issues.

It’s unclear if Aramco will be involved in the refineries mentioned by India’s envoy to Saudi Arabia on Tuesday.

Saudi Arabia, the de-facto leader of the OPEC+ producer group, was once India’s largest oil supplier but has seen its share of the market decline as imports from Russia and Iraq increase.

Ahead of his visit, Modi had said the two sides are exploring joint projects in refineries and petrochemicals, according to comments he made to Arab News.