Last month, India and Saudi Arabia agreed to enhance their energy cooperation, including potential Saudi investments in two new refineries in India. However, initial negotiations have come to a standstill due to disagreements over oil pricing and the volume of crude oil to be supplied.
At the end of April, both countries announced plans to expand their cooperation in the supply of crude oil, petroleum products, and the construction of new refineries. According to official statements, a high-level task force also agreed to collaborate on the development of two new refineries in India.
India’s state-run refineries are planning to build several new processing units to meet the growing demand for fuel and petrochemical products. On the other hand, Saudi Arabia, the world’s largest crude oil exporter, seeks to strengthen its presence in major Asian markets, which are expected to drive global demand growth in the coming years.
However, disputes over the terms of cooperation have halted Saudi Arabia’s entry into India’s refining projects. According to reports, Saudi Arabia wants to supply half of the crude oil needed for the new refineries and sell it at its Official Selling Price (OSP). In contrast, India is focused on securing the lowest possible prices and prefers not to depend entirely on a single supplier.
Reports suggest that India proposed sourcing around 20% of the crude oil for the new refineries from Saudi Arabia, with discounted rates compared to the OSPs that Saudi Arabia sets monthly against the Oman/Dubai benchmark. These disagreements have caused the talks to stall at an early stage.
