MUMBAI -- Oil and gas major Saudi Aramco has agreed with Indian government-run oil refiners to build a $44 billion integrated refinery and petrochemical complex in Maharashtra, a deal that shows Saudi Arabia's ambitions to expand in Asia.
The company last year approved a huge investment in a project in Malaysia and is also participating in a project to upgrade a refinery in Indonesia. These investments followed Saudi Aramco's deals in China in partnership with state-owned China Petroleum & Chemical and America's Exxon Mobil.
Leading Indian upstream companies such as Indian Oil, Bharat Petroleum and Hindustan Petroleum will join as partners in the Aramco deal, said a government statement Wednesday. Saudi Aramco will hold a 50% stake in the project. The three companies have floated a joint venture Ratnagiri Refinery & Petrochemicals for the planned refinery in Maharashtra, a western state.
The refinery will be able to process 1.2 million barrels of crude oil per day and a range of refined petroleum products, including petrol and diesel, according to the statement. The refinery will also provide feedstock for the integrated petrochemicals complex, which will be capable of producing about 18 million tons per annum of petrochemical products.
Saudi Aramco can also bring in a strategic partner, according to deal terms. Work is expected to be completed by 2025. Last year, the company set up its office in India through subsidiary ARAMCO Asia India and announced its intentions to acquire stakes in Indian refining projects.
The expansion is part of Saudi Crown Prince Mohammad bin Salman's plans to boost the Saudi economy. In March, Saudi Aramco President and CEO Amin Nasser said in a Nikkei interview in Tokyo that the company was looking at additional investments in China, which is considered a very important destination.
The growing Asian region is also an important market for Aramco. The International Energy Agency said in September it expects energy consumption in Asia outside of Australia, Japan and South Korea to increase by 51% between 2015 and 2040, "the largest regional growth in the world."
In India, Saudi Aramco will seek to regain top position by replacing Iraq as the leading supplier of oil. Press Trust of India reported that in the April-January period, Iraq dethroned Saudi Arabia by supplying 38.9 million tons of oil. Quoting Indian Oil Minister Dharmendra Pradhan, the local news agency said Saudi Arabia supplied 30.9 million tons of crude oil in the first 10 months of the financial year ended March.