* Indian supermajor Reliance makes key investment in plan

* Announcement comes in election amidst spiking fuel

prices

(Updates with company statement, analyst comments, background,

changes dateline, previous Washington)

By Erwin Seba and Nicole Jao

HOUSTON, March 10 (Reuters) - U.S. President Donald

Trump announced on Tuesday plans for a new oil refinery to be

built in Brownsville, Texas, thanking Indian energy company

Reliance Industries for its role in the project.

Trump made the announcement as U.S. drivers are reacting to a

spike in gasoline prices following the start of the U.S.-Israeli

war with Iran, and while Republicans and Democrats gear up for

midterm elections that could determine which party controls

Congress through the last two years of Trump's presidency.

America First Refining said in a statement that a 168,000

barrel-per-day (bpd) refinery to be built at the port of

Brownsville along the U.S.-Mexico border, when operating, would

offset $300 billion in the U.S. trade deficit.

"This project represents a historic step forward for

American energy production," said John V. Calce, chairman and

founder of America First Refining. "For the first time in half a

century, the United States will build a new refinery designed

specifically for American shale oil."

Many U.S. Gulf Coast refineries are unable to process light,

sweet crude oil from fracking shale fields because they were

configured in the last 40 years to run lower-cost heavy, sour

crude, which is higher density and contains more sulfur.

Calce praised Trump for his administration's energy policy

emphasizing production of U.S. crude oil by domestic refineries.

Reliance, India's largest private sector company, identified

only as a "global supermajor" in the America First statement but

named by Trump in a post on Truth Social, provided a "9-figure

investment" at a "10-figure valuation."

Reliance also signed "a binding 20-year offtake term sheet"

with America First meaning the company will buy products the

refinery produces.

America First plans to break ground in the second quarter of

this year, the company said.

INDUSTRY EXPERTS QUESTION NEED

Analysts were skeptical about the need for a new refinery on

the U.S. Gulf Coast, which is already home to eight of the 10

largest U.S. refineries. Five of the largest refineries are in

Texas.

"Initial announcements like this by the Trump administration

have a lot of hyperbole," said John Auers, managing director of

Refined Fuels Analytics.

The America First refinery would "fuel U.S. markets,

strengthen our national security, boost American energy

production, deliver billions of dollars in economic impact, and

will be the cleanest refinery in the world," Trump said in the

Truth Social post announcing the project.

U.S. Gulf Coast refineries have advantages over plants in

other parts of the United States, said Tom Kloza, principal

analyst with Kloza Advisors LLC.

"If Brownsville is indeed the location for the build, I

would assume that they are looking at an export refinery," Kloza

said. "There is not much local demand and there are not pipeline

connections to take Brownsville product elsewhere."

U.S. refineries are the major supplier of motor fuels and

heating oil to South America, Kloza said, and have lower costs

for natural gas, hydrogen and domestic crude oil.

Auers noted Reliance's long history in refining. The company

operates the 1.4-million-bpd oil refinery in Jamnagar, India,

the largest on the planet.

"Let's see what develops," he said. "Reliance is a very

successful company."

In addition to interests in oil refining and petrochemicals,

Reliance, which reported $125 billion in revenue in 2025,

operates businesses in retail, new energy, digital services,

media and entertainment, according to a company website.

Beginning in late 2025, two California refineries, with a

combined capacity of 284,000 bpd, have permanently shuttered

production, citing California's strict regulation of fossil fuel

industries.

The cost of construction of new refineries or new additions

to refineries in the past decade has averaged about $40,000 a

barrel of capacity, or about $6.7 billion for 168,000 barrels.

U.S. refining capacity, which was 18.4 million bpd at the end of

2024, according to the U.S. Energy Information Administration,

is expected to grow through gradual increases in capacity into

the 2030s, Auers said.