Reliance spins off oil-to-chemical unit
Billionaire Mukesh Ambani’s Reliance Industries Ltd has accomplished spin-off of the agency’s oil-to-chemical enterprise into a brand new unit that can assist it pursue development alternatives with strategic partnerships, the corporate has mentioned.
The oil-to-chemical (O2C) enterprise unit holds Reliance’s oil refinery and petrochemical property and retail gas enterprise however not upstream oil and gasoline producing fields comparable to KG-D6 and textiles enterprise.
Reliance for the primary time reported built-in earnings of the O2C enterprise in its third quarter monetary outcomes. Beforehand, refining and petrochemical companies have been reported individually whereas gas retailing income was a part of the agency’s total retail enterprise.
Within the October-December 2020 earnings assertion, refining and petrochemical in addition to gas retailing companies earnings have been reported as one. Consequently, it didn’t give refining margins – essentially the most wanted quantity to evaluate the agency’s oil refining enterprise.
“Reorganising refining and petrochemicals as oil-to-chemicals (O2C) displays new technique in addition to administration matrix,” the corporate mentioned in a put up incomes investor presentation.
This, it mentioned, will “facilitate holistic and agile resolution making” in addition to “pursue enticing alternatives for development with strategic partnerships”.
Reliance began work on hiving off the O2C enterprise right into a separate unit final yr for a attainable stake sale to corporations comparable to Saudi Aramco.
It values the O2C enterprise at USD 75 billion and has been in talks with Saudi Arabian Oil Co (Aramco) on the market of a 20 per cent curiosity.
The corporate, nevertheless, didn’t point out discussions with Aramco, that are mentioned to have hit a valuation roadblock.
The reorganisation would “drive the transfer in direction of additional downstream and nearer to prospects” and “present sustainable and inexpensive vitality and supplies options to satisfy India’s rising wants,” the agency mentioned within the presentation.
Reliance O2C Restricted homes oil refining and petrochemical vegetation and manufacturing property, bulk and wholesale gas advertising, and Reliance’s 51 per cent curiosity in retail gas three way partnership with BP of the UK.
The O2C unit additionally homes the agency’s Singapore and the UK-based oil buying and selling subsidiaries and advertising subsidiary, Reliance Industries Uruguay Petroquimica SA.
It additionally homes Reliance Ethane Pipeline Restricted that operates a pipeline between Dahej in Gujarat and Nagothane in Maharashtra in addition to 74.9 per cent stake that Reliance holds within the three way partnership with Sibur.
Its very massive ethane carriers, gasoline pipelines comparable to one which transports coal-bed methane from its CBM blocks, abroad oil and gasoline asset holding firm Reliance Industries (Center East) DMCC, and home exploration and manufacturing property wouldn’t kind a part of the O2C unit.
Additionally, Reliance’s textiles enterprise as operated out of the Naroda web site, Baroda township and land, together with cricket stadium, Jamnagar energy property, and Sikka Ports and Terminals Restricted would additionally not be a part of the O2C unit.
Ambani had in July 2019 said that the method of spinning of O2C right into a separate subsidiary could be accomplished by early 2021.
Reliance owns and operates twin oil refineries at Jamnagar in Gujarat, with a mixed capability of 68.2 million tonnes each year.
It’s also the nation’s largest petrochemical producer with items at Jamnagar, Dahej, Hazira, Nagothane, Vadodara, Patalganga, Silvassa, Barabanki, and Hoshiarpur.
The corporate holds a 66.6 per cent stake within the KG-D6 block the place it’s investing about USD 5 billion in growing a second set of gasoline discoveries together with BP.
It additionally has an analogous stake within the NEC-25 block within the Bay of Bengal and operates two CBM blocks in Madhya Pradesh. These upstream property will not be a part of the O2C unit.
“Reliance O2C (is) one of the vital built-in producers of value-added fuels, chemical compounds and supplies,” the presentation mentioned. “O2C to maximise downstream, cut back transportation fuels and create clear and inexperienced vitality platforms.”
