Saudi Arabia is reviving plans of investing in grassroot Indian refineries after Indian state-run refiners began evaluating proposals to reduce the share of expensive Saudi grades sourced under term contracts and substitute them with cheaper Russian oil, refining sources and government officials said, and ship tracking data showed.
The move by Saudis to consider investments in new Indian refineries, proposed by both Bharat Petroleum and Hindustan Petroleum, is to ensure a captive market for their crude oil, and regain dwindling market share in India - after their proposed investments in Ratnagiri refinery and Reliance Industries soured.
Saudi Aramco declined comments on the story in an email.
Indian state-run refiners may cut volumes under existing term contracts by at least 10 per cent, with the level of reductions differing across companies based on their refinery configurations, two senior refining sources said.
New term contracts with Saudi Arabia will start next April for FY26—shipments in FY25 between April and October averaged 592,000 bpd.
That places the cuts to average at least 60,000 bpd.
Simultaneously, Indian state-run refiners led by Indian Oil are also in talks with Russian state oil companies led by Rosneft for term contracts.
Indian Oil's term contract with Rosneft for around 490,000 bpd expired in March and is up for renewal, industry officials said.
While the Saudi contracts comprise a fixed, committed volume and optional quantities on a financial year basis, Iraqi contracts are on a calendar year term.
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