Saudi Aramco likely to acquire 20% stake in Indian greenfield refinery

State-owned Bharat Petroleum Corporation Limited (BPCL) is looking to dilute 30-40 per cent equity in its proposed greenfield refinery in the southern Indian state of Andhra Pradesh, with Saudi Aramco and Oil India Ltd (OIL) likely buyers.

Business Standard said a high-ranking BPCL executive told the newspaper that Aramco is expected to pick up a minority holding of around 20 per cent, while OIL may acquire close to a 10 per cent stake. An additional 4-5 per cent stake could also be offered to banks that have shown interest in participating in the project.

Both BPCL and Oil India did not reply to the request to comment on the issue, while Saudi Aramco declined to comment.

Earlier in March this year, Reuters had done a story saying Saudi Aramco was in talks to invest in two planned refineries in India.

BPCL was allotted nearly 6,000 acres of land by the Andhra Pradesh government for the refinery-cum-petrochemical complex near the Ramayapatnam port in Nellore district, aimed at meeting rising domestic fuel demand as well as boosting petrochemical exports.

The BPCL executive told the paper that investment discussions are expected to move forward once the detailed feasibility report (DFR) is completed, which will determine the final project cost. The DFR is likely to be ready by the end of February. BPCL expected the estimated investment to be over INR96,000 crore (approximately US$11 billion at the time), but the final cost could deviate by as much as 30 per cent from initial projections.

BPCL is India’s second-largest oil marketing company, with domestic sales of 52.4 million tonnes and a market share of 27.44 per cent in the last financial year. It operates the country’s third-largest refining capacity, about 14 per cent of the national total, through refineries in Mumbai, Kochi and Bina.