Three of India’s largest state-owned oil companies–Indian Oil Corp. (IOC), Bharat Petroleum Corp. Ltd. (BPCL) and Hindustan Petroleum Corp. Ltd. (HPCL)–have signed an agreement to build India’s largest oil refinery at a cost of USD30 billion.

IOC will own a 50% stake in the 60-million-tonne-per-annum oil refinery, while BPCL and HPCL will each own a 25% stake.

IOC has been looking at the west coast to cater to customers in the west and south, as most of its refineries are mostly in northern India, while both HPCL and BPCL have been looking at expanding due to constraints at their Mumbai refineries.

The oil refinery and petrochemical complex will be constructed in two phases on a 12,000-15,000 acre site. At least two to three sites are being considered along India’s west coast in the state of Maharashtra.

Phase 1 will cost INR 1.2-1.5 lakh crore (USD17.7-22.1 billion) and will be completed in five to six years from the date of the land acquisition. Phase 1 will include a 40-million-tonne-per-year oil refinery, together with an aromatic complex, naphtha cracker unit and a polymer complex.

Phase 2 will cost INR 50,000-60,000 crore (USD7.8 billion-8.8 billion) and will include a 20 metric tonne-per-year oil refinery.

India currently has a refining capacity of 232.06 million metric tonnes, which exceeds domestic demand of 183.5 million metric tonnes in 2015-16, as Reliance Industries Ltd.’s Jamnagar refinery is an export-oriented refinery. Domestic demand is expected to reach 458 million metric tonnes by 2040.