India's Bharat Petroleum Corporation (BPCL) is planning to construct a new refinery with an investment of approximately Rs500bn ($5.99bn), reported the Economic Times, citing sources.   

The state-run enterprise is evaluating potential locations in Andhra Pradesh, Uttar Pradesh and Gujarat for the facility, which is expected to have a capacity of 12mtpa.  

"BPCL is planning another refinery either on the east coast or on the west coast as India needs more refineries to meet the increasing fuel demand," one of the sources was quoted by the publication as saying.  

Talks are at an initial stage, according to the source, who also mentioned that BPCL could also consider Uttar Pradesh as the potential location. 

This move aligns with BPCL's strategy to expand its refining capacity to 45mtpa by the financial year 2029. 

Over the next five years, BPCL's plans to invest around Rs1.7trn across its core businesses including oil refining, fuel marketing, petrochemicals and the clean energy sector.  

For refining and petrochemical projects specifically, BPCL has earmarked Rs750bn, with additional funds allocated for pipeline and marketing initiatives. 

The decision to build a new refinery comes after the cancellation of the RRPCL project, a 60mtpa integrated complex that faced environmental and local opposition.  

The RRPCL was a joint venture involving Indian Oil Corporation, BPCL, Hindustan Petroleum Corporation and Saudi Aramco, with Aramco holding a 50% stake. 

India’s fuel demand has been on the rise, with a record consumption of approximately 233.276mt in fiscal year 2024, up from 223.021mt the previous year.  

To meet this growing demand, the country aims to increase its refining capacity by nearly 80% to around 450mtpa by 2030.  

The focus on smaller refineries is strategic, as they typically encounter fewer challenges such as land acquisition and regulatory approvals. 

Analysts claim that although the need for petroleum is increasing globally, there are not any new refineries opening, and existing ones in the US and Europe are shutting down. 

"World over refineries are closing, which may lead to a crisis of finished products," one of the sources said.  

"This is where India can step in and become a refining hub for the world, but for that, we need to add more refining capacity. Fuel demand is predicted to be robust in the coming years."