India will increase its refining costs with Aramco and ADNOC by 36%

From Nidhi Ferma

NEW DELHI (Reuters) – India has increased by more than 36% the estimated cost of building an oil complex and a giant refinery in cooperation with Saudi Aramco and the National Oil Company of Abu Dhabi (ADNOC), indicated four sources. .

The refinery, which has a refining capacity of 1.2 million barrels per day, is now expected to be built in the state of Maharashtra in Ruha, Rajigad district, about 100 km south of Mumbai.

The four sources, who are familiar with talks between Saudi energy minister Khalid al-Falih and India's oil minister Dharmendra Pradhan, said the new $ 60 billion cost estimate was presented. in Faleh during a meeting with the Indian Minister of Petroleum in New Delhi last month.

"A preliminary estimate of $ 60 billion has been transferred to Saudi Arabia," said a source at the meeting. The final figure will be decided on the basis of a detailed feasibility study.

The cost of the project was estimated at $ 44 billion when signing the agreement with Aramco in 2018. All four sources requested anonymity because of the sensitivity of the problem.

Despite rising costs, the project is expected to start operating in 2025, the sources said.

Global oil producers are competing for India's entry into a stable market and are taking advantage of the strong demand for gasoline and petrochemicals, thanks to a population of more than 1.3 billion of people.

India, the world 's third largest importer of crude oil, plans to increase its refining capacity by 77%, to reach 8.8 million barrels a day by 2030.

The state government has suspended the acquisition of land on the former site of Ratnagiri, 400 km south of Mumbai, after thousands of farmers refused to give up their land , fearing that the project will harm the region, known for its production of Alfonso mango trees, cashew farms and fishing villages for its abundance in the region.

"This represents a significant increase in costs," said Sri Baravikarasu, director of FGI Consulting in Singapore. "But given the size of the project, we expect the investment to be progressively realized," she said, adding that her company was skeptical about meeting the project schedule. 2025.

The sources said that the increase in costs was mainly due to the delay in land acquisition for the project and that all accounts should be reinstated.

State companies, Indian Oil Corporation, Bharat Petroleum Corp. and Hindustan Petroleum, hold 50% of the shares of Ratnagiri Refining and Petrochemicals, the company that manages the project.

Aramco and ADNOC have the remaining half.

He abstained from me. Ashok, general manager of the company, will comment on the rising costs and the Indian Ministry of Oil has not reacted in the immediate future.

The Saudi Ministry of Energy and Aramco have not responded to a request from Reuters to comment on the case.

The state government of Maharashtra has promised to take over the land of the new site by the end of December.

While highlighting the interest for the refining sector in India, a consortium led by Russian Rosneft has acquired a majority stake in Neyara Energy in 2017.

Aramco is also in negotiations to acquire a minority stake in Reliance Industries' refining, marketing and petrochemical businesses, and badysts believe that any delay in this acquisition may require it to restrict its own refineries. .

(Reuters)