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A Signal of Strong Short Term Demand in Oil Markets

A Signal of Strong Short Term Demand in Oil Markets

A significant development this week…

$44B Aramco/ADNOC Indian Mega Refinery Delayed  

The commissioning of a mega refinery and petrochemical complex worth US$44 billion and involving Saudi Aramco and ADNOC has been pushed out by two years to 2025, a top executive at the Indian consortium part of the project told Reuters on Tuesday.

Ratnagiri Refinery & Petrochemicals Ltd (RPPL), the joint venture company responsible for the huge 1.2 million bpd complex construction and development, had initially scheduled the commissioning for 2023. According to the website of the joint venture, the refinery is expected to be commissioned by the year 2025, and is planned to produce high-quality automotive and aviation fuels, plus a wide range of petrochemical products.

“The project will be completed in 2024 and commissioning will be in 2025,” B. Ashok, the chief executive of RPPL, told Reuters on Tuesday.

The joint venture company now has more detailed information on the refinery configuration and the availability of people to build it, according to Ashok.

In June this year, Saudi Aramco and the Abu Dhabi National Oil Company (ADNOC) signed a framework agreement and a memorandum of understanding with a consortium of Indian national oil companies to join the mega project at Ratnagiri in the Maharashtra state on India’s west coast.

Related: The Dangers Of China’s Growing Oil Demand

Saudi Aramco and ADNOC will jointly own 50 percent of the new joint venture company RRPCL, while the other 50 percent will be held by the Indian consortium. The parties agreed to explore a strategic partnership and co-investment in the development of the US$44 billion mega refinery.

By investing in the giant Indian refinery, the national oil companies of leading OPEC producers Saudi Arabia and the UAE would secure off-take for their crude in a strategic fast-growing oil market in Asia. 

However, the process of land acquisition for the new giant complex has been put on hold due to strong opposition from local farmers, many of whom depend on their land for their income and livelihoods, the chief minister of Maharashtra, Devendra Fadnavis, said in November. According to Reuters, thousands of farmers are not eager to give up their land.

By Tsvetana Paraskova for Oilprice.com

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