The agreement to establish the refineries comes at a critical time when both nations are navigating economic challenges exacerbated by US tariff policies. Credit: tonkid/Shutterstock.

India and Saudi Arabia have agreed to deepen their energy partnership by reaching an accord to set up two oil refineries in India.

This move is part of a broader initiative to enhance cooperation across various sectors including tourism and technology, according to a report by Bloomberg.

The announcement follows a meeting between Saudi Crown Prince Mohammed bin Salman and Indian Prime Minister Narendra Modi in Jeddah.

The agreement to establish the refineries, disclosed by India’s Ambassador to Saudi Arabia, Suhel Ajaz Khan, comes at a critical time when both nations are navigating economic challenges exacerbated by US tariff policies.

Ahead of the meeting, Modi had highlighted potential joint ventures in refineries and petrochemicals.

With India experiencing its slowest growth in four years and Saudi Arabia facing potential pressure from low oil prices, this collaboration could provide mutual stability and energy security, the report said.

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The G-20 nations have previously discussed partnerships in a range of fields, from agriculture to technology.

In 2019, Crown Prince Mohammed pledged $100bn (SR375bn) in investments in India, of which only around $10bn has been realised.

State-owned Saudi Aramco has also been attempting to enter India’s refining sector, but efforts have been hindered by various challenges.

It remains uncertain whether Aramco will be involved in the new refinery projects mentioned by Khan, the report said.

Historically, Saudi Arabia has been a significant oil supplier to India, but its market share has diminished as India increases imports from Russia and Iraq.

Additionally, India recently passed the Oilfield (Regulatory and Development) Amendment Bill, 2024, aiming to attract investors and boost oil and gas exploration.

This legislative reform seeks to create a stable legal framework for the industry, balancing investor needs with national interests.