When US President Donald Trump announced the setting up of a refinery in partnership with Reliance Industries Ltd. last week, it came with a headline figure of $300 billion. While Reliance hasn’t offered any comment so far, the few details released by America First Refining (AFR), the US company fronting the project, are revealing.
The actual arithmetic behind the eye-popping number is modest. Reliance will purchase 1.2 billion barrels of American shale oil worth roughly $125 billion at prevailing prices over 20 years, with the refined output valued at another $175 billion. Effectively, the $300 billion is a projected two-decade commercial flow.
AFR’s chairman put the construction cost of the facility in Brownsville, Texas, at $3-4 billion, with Reliance’s equity stake disclosed only as a “nine-figure sum”—below a billion dollars. The plant, if all goes smoothly, might be operational by 2029 with the refined output destined exclusively for India, not US markets. So, Reliance buys the crude, refines it and then buys it back as diesel and jet fuel. The actual value added to the American economy is the refining margin, and the jobs, sitting in between. Not quite what Trump says “will fuel U.S. Markets, strengthen our National Security, boost American Energy production, deliver Billions of Dollars in Economic impact”!
What it does, is to draw attention to a structural problem American energy policy has failed to solve for decades. The last major petroleum refinery built in the US was in 1977, and in the nearly half-century since, America has become the world’s largest oil producer. Yet, in that same period, the country built no new refineries to process any of the oil.
The big hurdle has always been permissions. Arizona Clean Fuels spent four years getting a single air quality permit in the mid-2000s and the project still never got built. A North Dakota refinery began seeking permissions in 2013 and wasn’t expected to open until a decade later. Smart investors, staring at such long timelines of regulatory uncertainty, have simply stayed away.
What’s more, older US refineries were built for heavy imported crude. When light shale flooded domestic fields in the 2010s, they couldn’t process it efficiently. So the US exported its own crude oil cheaply and imported refined products expensively. Meanwhile, Europe which built its last major refinery in 1975, has been steadily shuttering capacity as EV adoption erodes demand.
It is this anomaly that the US is seeking to fix, though one 160,000-barrel-a-day refinery in Texas will hardly be enough.
For Reliance Industries, however, the move comes with significant benefits, not least geopolitical ones. By late 2024, the company had become the world’s largest private buyer of Russian crude, importing over 500,000 barrels per day from Rosneft. Then, in October 2025, the US sanctioned Rosneft directly. Not wanting to risk secondary sanctions, Reliance halted purchases and Russian crude into Jamnagar collapsed to around 150,000 barrels per day, leaving the Indian company suddenly short of cheap feedstock.
The US refinery fills that gap. Reliance stands to gain 20 years of American shale supply, replacing Russian feedstock with a source that carries the US president’s personal blessing. In return, it contributes its technical expertise: Jamnagar’s ability to process over 200 grades of crude across 1.4 million barrels per day of capacity makes it uniquely suited to the kind of complex refining the new facility will require.
It seems like a workable deal, though a larger question remains unanswered. The announcement came as oil markets were rattled by Iran-related disruptions, with crude hovering around $100 a barrel. The resulting energy crisis makes the bet feel necessary but the underlying economics of a world moving away from fossil fuels are less favourable. The International Energy Agency’s Oil 2025 report projects that demand for combustible fossil fuels may peak as early as 2027, with annual demand growth slowing to a trickle by 2030. By 2035, the midpoint of Reliance’s offtake contract, Europe will have effectively ended new petrol and diesel car sales.
The Brownsville project may run profitably in its first decade, particularly if geopolitical disruption keeps American shale cheap. But it is, unmistakably, a bet on an energy future in which fossil fuel demand stays robust enough to justify two decades of new refining capacity. That’s a big if.
In Company Outsider, Sundeep Khanna distills more than three decades of his experience writing on India Inc. into a thousand words of context and insights that few can bring to the table. Want this newsletter delivered in your inbox? Subscribe here.