The Oil and Natural Gas Corporation (ONGC), a state-owned entity and the largest oil and gas explorer in India, is evaluating plans for an $8.3 billion refinery and petrochemicals project in Uttar Pradesh, the country's most populous state, to capitalize on the increasing demand for fuel, according to sources familiar with the situation as reported by Bloomberg.

ONGC is contemplating the establishment of this refinery project, estimated to cost approximately $8.3 billion (700 billion Indian rupees), in northern India's Uttar Pradesh, which has a population of 241 million, making it the most densely populated state in India.

According to Bloomberg's sources, the refinery and petrochemical facility is projected to have an annual production capacity of 9 million tons of fuels and petrochemicals.

Discussions have taken place between ONGC and Bharat Petroleum Corporation Ltd (BPCL), a state-controlled refiner, regarding the potential construction of the refinery in Prayagraj, the most populous district in Uttar Pradesh, as per the sources.

In a related development, BPCL is reportedly negotiating with major local banks to secure approximately $3.8 billion in funding to enhance the capacity of one of its refineries, as Bloomberg reported last week, citing knowledgeable sources.

BPCL aims to raise around $3.8 billion (320 billion Indian rupees) from financial institutions to increase the capacity of its Bina refinery located in Madhya Pradesh, central India.

India anticipates an annual increase in refining capacity of about 1.12 million barrels per day (bpd) until 2028 to meet the surging fuel demand. The total refining capacity in India is projected to grow by 22% over the next five years, rising from the current 254 million metric tons per year, equivalent to approximately 5.8 million bpd.

BPCL's chairman, G. Krishnakumar, stated last week that the company expects India's fuel demand to rise by 4% to 5% annually for the foreseeable future.

To address the escalating demand for refined oil products and petrochemicals, numerous Indian refiners are planning to enhance their crude processing capabilities and ethylene cracker units at their facilities.