RoydadNaft –  Indian state-owned refiner Chennai Petroleum Corporation Limited is holding discussions with banks to obtain a loan of $3.33 billion (280 billion Indian rupees) that would help it build a refinery in southern India, sources with knowledge of the plans told Bloomberg.

Chennai Petroleum – whose 52% majority shareholder is India’s biggest refiner, state-held Indian Oil Corporation – has proposed to build a refinery worth a total of $3.9 billion (330 billion rupees) in the state of Tamil Nadu in the south.

National Iranian Oil Company (NIOC) is also a shareholder in Chennai Petroleum with 15.4%, but it will not participate in the refinery construction. The new crude processing facility will be 75% owned by Indian Oil, while Chennai Petroleum will hold the other 15% in the proposed new complex called the Cauvery Basin refinery project.

State Bank of India is expected to lead the loan syndicate for the new refinery, according to Bloomberg’s sources.

Indian refiners are looking to expand their refining capacity to meet growing domestic demand for fuels amid higher-than-average economic growth and rising middle-class numbers.

Another state refiner, Bharat Petroleum Corporation Ltd (BPCL), is also reportedly in talks with major local banks to secure a loan of about $3.8 billion which it will use to expand the capacity of one of its refineries.

Separately, 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, Uttar Pradesh, to take advantage of growing fuel demand.

India will drive up to 35% of global energy demand growth over the next 20 years, petroleum minister Hardeep Puri said at the Gastech conference in Houston last month.

“If you say that global demand is increasing by one percent, ours is increasing by three times that,” Puri said. “In the next two decades, 35% of the increase in global demand will come from India.”