India is considering building several refineries instead of a single mega plant planned with Saudi Aramco and Abu Dhabi National Oil Company (ADNOC), due to challenges in acquiring land, three sources familiar with the matter said.
Hurdles in land purchases are one of the key reasons for sluggish infrastructure development in Asia’s third-largest economy.
Aramco and ADNOC joined a consortium of Indian state-run firms in 2018 to set up a 1.2 million barrels-per-day coastal refinery and petrochemical plant in western Maharashtra, seeking a reliable outlet for their oil.
Delays in acquiring a 15,000-acre land parcel have almost stalled the project, initially planned for 2025, and boosted costs by 36% to $60 billion, as per estimates made in 2019.
“There is a proposal that instead of one we can actually have three, which is a matter of discussion between the companies involved,” said one of the sources.
Attempts to acquire land failed due to issues including farmers’ refusal to surrender their land, fearing the project could damage the Ratnagiri region famed for its Alphonso mangoes, cashew plantations, and fishing hamlets.
Aramco and ADNOC own 25% each in the joint venture Ratnagiri Refinery & Petrochemicals Ltd (RRPCL), a company named after the
region where the refinery was initially planned.
State-run refiners Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum hold the remaining stake in RRPCL.
“The role of Maharashtra government is crucial in acquiring the land,” the source said.
Maharashtra’s industry minister did not respond to calls seeking comment. RRPCL chief executive M. K. Surana and ADNOC did not offer comments, while Aramco last week said: “We will respond at the earliest opportunity”.
Another source said ADNOC and Aramco were aware of the plan for several refineries.
“It is good to build the refinery at different sites if a huge chunk of land is not available as that will reduces investment risk,” said a second source.
“Also with multiple refineries you have the flexibility to modulate product slate in line with changing product demand pattern,” this source said.
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