US President Donald Trump announced plans to build an oil refinery on the country’s southern border. The investor will be the Indian corporation Reliance Industries, which manages the world’s largest oil refining complex. The announcement comes amid rising gasoline prices and ahead of the midterm congressional elections.
The new refinery with a capacity of 168 thousand barrels per day will be located in the port of Brownsville. The launch will be carried out by America First Refining. Trump called the investment from Indian partners colossal and thanked Reliance for its participation.
The plant will specialize in processing light, low-sulfur oil produced by hydraulic fracturing. This is important because most older refineries on the Gulf Coast are configured for heavy, sour crude and cannot handle shale feedstock efficiently.
Reliance has signed a 20-year, binding product repurchase agreement with America First. This will guarantee sales and, according to the parties, will help reduce the trade imbalance that has long worried Trump. Construction is expected to begin in the second quarter of this year.
However, industry experts greeted the news with skepticism. Analysts point out that the Gulf Coast is already concentrated eight of the country’s ten largest refineries, and the need for new capacity is not obvious. Director of Refined Fuels Analytics John Auers called the statements overly optimistic and suggested that the real picture would become clearer later.
Tom Kloza of Kloza Advisors noted the lack of pipelines connecting Brownsville to other regions. In his opinion, the plant will most likely be focused on exports to South America, where American fuel is in demand. At the same time, gas, hydrogen and oil costs in the US remain low, which provides an advantage.
Reliance is not new to the industry. The company operates a complex in Jamnagar with a capacity of 1.4 million barrels per day and has annual revenues of more than $125 billion.
Construction costs are estimated at about $6.7 billion, based on average costs for similar projects in recent years. Against this background, two plants with a total capacity of 284 thousand barrels per day have already closed in California since the end of 2025 due to strict regulation.
Total U.S. refinery capacity stood at 18.4 million barrels per day at the end of 2024, and is expected to continue to increase gradually into the 2030s.
Thus, the announcement of a new refinery looks like a bold step, backed by political motives and support one of the world leaders in oil refining. But how economically justified it is, time and real investment decisions will tell.
Source: Reuters
Image: Kevin Lamarque
