India’s petroleum minister Dharmendra Pradhan has admitted a cost escalation for the proposed 60-million MT joint venture greenfield refinery project by Saudi Aramco and Abu Dhabi National Oil Company (Adnoc).
The project, which also includes a consortium of the three state-owned Indian refining and marketing companies, was originally projected to cost $44 billion.
The Indian minister, however, did not specify the cost escalation for the project, coming up in Maharashtra, on the western cost.
The project would be implemented in phases and would focus on petrochemicals. The cost of the project was $44 billion, now it will be more than that, Pradhan told reporters in Abu Dhabi, without specifying the new projected cost.
Pradhan was in Abu Dhabi to attend the 8th Asian Ministerial Energy Roundtable held there.
There have been reports about a 36 percent escalation in the project cost of the refinery project due to shifting of the project to Roha in the Raigad district, about 100 km south of Mumbai, from the originally proposed site at Ratnagiri, about 400 km south of Mumbai.
The state administration was forced to shift the project site in the wake of farmers’ protest against acquisition of land for the project. The Ratnagiri belt consists of fertile land, famous for its Alphonso mangoes and cashew crops.
The proposed 1.2 million barrel per day project, jointly developed by the Aramco-Adnoc combine and the Indian refiners Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum on a 50:50 partnership basis, is also expected to have a chemicals capacity of 18 million tonnes annually.
Although the partnership deal for the refinery-cum-petrochemicals project was signed in 2018, the project is yet to take off due to various reasons, mainly related to land acquisition.
The project managers, however, are said to be still hopeful of a 2025 commissioning of the project, despite the cost escalation and construction delay.
Saudi Aramco has entered into an in-principle agreement with the Indian conglomerate Reliance Group for acquiring a 20 percent stake in the latter’s refining-cum-petrochemicals business unit last month for $15 billion, leading to speculations about the future of the 60-million greenfield refinery project.
However, the Indian petroleum minister’s statement that India’s share of total global primary energy demand is set to double to 11 percent by 2040 and it called for making matching investments in the energy sector is being seen as a pointer that India is keen on the Saudi Aramco-Adnoc combine’s investment in the greenfield refinery project in Maharashtra.
“We are preparing for such a growth path of energy demand in the country. This calls for making matching investments in the energy sector,” Pradhan said, addressing the session on ‘Advancing Inclusive Access to Secure, Affordable, and Sustainable Energy Services’ at Abu Dhabi meet on Tuesday.
“In India, we have to improve availability of energy to over 1.3 billion people, whose per capita energy consumption is lower than the global average. Now, India is the third-largest energy consumer in the world, and its energy demand is growing faster than all major economies of the world,” Pradhan said.
Pradhan also had a meeting with his UAE counterpart Suhail Mohamed Faraj Al Mazrouei, Minister of Energy and Industry, during his visit to Abu Dhabi.
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