China has signed an agreement to build an oil-leather factory in India and will supply up to 400 million tonnes of the product annually.
The joint venture between China National Petroleum Corporation (CNPC) and Bharat Petroleum Corporation Limited (BPCL) will produce lubricants for oil-cleaning machines and automotive parts.
The joint venture is the first of its kind in Asia and is expected to create 3,000 new jobs, the China Association of Oil and Gas Industries (CAIGI) said.
The joint project is a key step in China’s commitment to diversify its domestic oil supply and support its domestic industry.
It will also reduce the cost of oil by more than 10% by 2020, according to the company.
The deal will provide the Chinese companies with an export market of nearly $100 billion annually and is one of the largest investments in Indian oil production, according the China-based trade body.
China has the world’s largest crude oil reserves.
Its domestic oil demand has grown to nearly 2.6 million barrels per day from 2.1 million bpd in 2020, up from 1.7 million bps in the previous year.
The move by India to increase oil exports is a big boost to the country’s domestic oil production.
India imported 2.5 million bd in 2016-17, up 13% from the previous fiscal.
The country is also a major oil exporter to Europe and Africa.