Saudi Arabia’s efforts to invest in two major oil refineries in India are being delayed due to disagreements over crude oil supply terms, according to people familiar with the negotiations. Although both countries recently agreed to collaborate on these refinery projects—part of Saudi Arabia’s strategy to secure demand in fast-growing markets like India—the talks have stalled. The sticking point is Saudi Arabia’s push to supply up to 50% of the crude needed for the refineries at its official selling prices (OSPs), which often exceed market rates. India, on the other hand, wants Saudi supply to match its planned 20% equity stake and be offered at a discount to OSPs.

Neither India’s oil ministry nor its project partners, Bharat Petroleum Corp. Ltd. (BPCL) and Oil and Natural Gas Corp. (ONGC), responded to requests for comment. Saudi Aramco also did not immediately reply. According to Aramco’s latest annual report, the company is targeting high-growth regions like India, China, and Southeast Asia to establish multibillion-dollar refinery ventures that ensure long-term crude demand and provide stability amid market fluctuations. While Aramco held an average 35% stake in overseas refiners in 2024, it supplied about 53% of their crude needs.

Saudi Arabia is also attempting to regain market share in India, which it has lost due to increased imports of discounted Russian crude. Failing to secure these projects would be diplomatically damaging, particularly after Crown Prince Mohammed bin Salman committed $100 billion in Indian investments during a 2019 meeting with Prime Minister Narendra Modi—of which only about 10% has come through.

Past attempts at major partnerships have already fallen through, including a $60 billion refinery with ADNOC and Indian state firms that was scrapped over land issues, and a planned 20% stake in Reliance Industries that never materialized. This has increased urgency around the BPCL refinery on India’s east coast and ONGC’s proposed plant in Gujarat. However, without a deal on discounted crude supplies, Indian partners see limited advantage in bringing in Saudi investment, especially when domestic financing is readily available. Saudi Arabia is also considering acquiring up to a 15% stake in Indian Oil Corp.’s Panipat refinery, though this proposal is still under review by the Indian government.