Megabuilds of the Future
March 2019
The refining industry is poised for large investments over the next few years. Despite protestations by industry critics, demand and supply of downstream oil and gas is only expected to increase, and there are several large-scale investments on the horizon. Two that stand out are the moves by the United Arab Emirates and Saudi Arabia, both of which are making big moves abroad and constructing large-scale billion-dollar refineries. Both initiatives are country-changing economic moves.

Gwadar Refinery

Pakistan has announced the commencement of Saudi Aramco plans to construct a US$10bn oil refinery in Gwadar, which is set to be constructed within the next 5 years and will be located near a Chinese-built seaport that forms part of China's Belt and Road initiative. The refinery will help to turn Pakistan into a net exporter of refined oil products.

The development is expected to be completed in early 2020, and will produce around 300,000bblpd—saving around US$3bn in imports every year. This would be a significant boon to Pakistan, which spends more than US$16bn each year on importing petroleum products.



Ratnagiri Refinery

India's US$44bn west-coast Ratnagiri refinery proposal has been restarted despite local government objections, with Aramco and Adnoc signing an MoU to take equal 25% stakes in the 1.2Mbblpd project, with the remainder being held by the Indian Consortium. The ambitious project, while less certain than the Gwadar refinery, is set to be the largest-scale refining facility in the country. It will be capable of processing around 1.2Mbblpd of crude, or 60Mtpa, to produce a range of refined petroleum products. It would also supply feedstock to an attached 18Mtpa petrochemical complex.

Construction on the refinery was originally intended to begin in 2020, after ongoing issues with land acquisition were resolved. While land was hoped to be made available before the end of 2019, plans were disrupted after local farmers and political parties organised protests, saying that not only would the land acquisition needed take away valuable and productive farmland and orchards, but that the pollution from development and operations could damage farms and fishing operations in the Ratnagiri district. A minister for the BJP has said that the refinery will now be relocated to a place where the local population “won’t oppose the project” but has been unclear on where that new location will be. As such, construction is likely to be pushed back, although the scale of the project and heavy international involvement will likely pressure the government to make a location decision sooner rather than later.