RoydadNaft –  State-held Oil and Natural Gas Corporation (ONGC), the biggest oil and gas explorer in India, is assessing plans for an $8.3-billion refinery plus petrochemicals project in the most populous Indian state to take advantage of growing fuel demand, sources with knowledge of the matter have told Bloomberg.

ONGC is considering situating the refinery project expected to cost $8.3 billion (700 billion Indian rupees) in the state of Uttar Pradesh in northern India. With 241 million inhabitants, Uttar Pradesh is the most populated state in the country.

The refinery and petrochemical complex is expected to be able to produce 9 million ton per year of fuels and petrochemicals, according to Bloomberg’s sources.

ONGC has discussed with state-controlled refiner Bharat Petroleum Corporation Ltd (BPCL) the idea to build the refinery in Prayagraj, the most populous district in the state, the sources told Bloomberg.

Separately, BPCL is said to be in talks with major local banks to secure a loan of about $3.8 billionwhich it will use to expand the capacity of one of its refineries, Bloomberg reported last week, quoting sources with knowledge of the discussions.

BPCL is looking to raise around $3.8 billion (320 billion Indian rupees) from lenders to boost the capacity of its Bina refinery in the Madhya Pradesh state in central India.

India has said that it expects to raise its refining capacity by around 1.12 million barrels per day (bpd) each year until 2028 as it seeks to meet rising fuel demand. Total Indian refining capacity is expected to increase by 22% in five years from the current 254 million metric tons per year, which are equal to around 5.8 million bpd.

BPCL’s chairman G. Krishnakumar said last week that the refiner sees India’s fuel demand rising by between 4% and 5% per year for the “foreseeable” future.”

To meet the growing demand for refined oil products and petrochemicals, many Indian refiners plan to expand their crude processing capacities and ethylene cracker units at refineries.