Suhel Ajaz Khan, the Indian Ambassador to Saudi Arabia, said in a press briefing that an agreement was reached between the two countries to establish two oil refineries in India through a joint venture. The agreement comes is the result of a mutual desire to establish closer energy ties and cooperation in sectors such as tourism and technology. This desire stems from both countries’ slow economic expansion, as well as global concerns regarding US tariff policies.

The briefing comes after a meeting between Saudi Crown Prince Mohammed bin Salman and Indian Prime Minister Narendra Modi met in Jeddah on Tuesday night. The meeting, which was supposed to be part of greater bilateral discussions, was cut short when Modi had to return to India following a terror attack in Jammu & Kashmir.

The actual establishment of the Joint Venture remains under scrutiny due to previous unmaterialized projects between the countries. A plan to jointly build a mega complex in western India, for example, hasn’t come to fruition due to challenges over land and a proposal for a stake in Reliance Industries Ltd.’s mega refinery in Gujarat failed to fructify on valuation issues. Similarly, in 2019 bin Salman had pledged $100 billion of investments in India, but only about $10 billion of that has materialised.

This joint venture could be seen as a measure to counteract Saudi Arabia’s decline as India’s largest oil supplier, especially since state-owned oil behemoth Saudi Aramco has also long sought entry into India’s refining sector with little success.

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