RIL in talks with Chevron, Exxon

Jamnagar, Mumbai, March 29 | Updated: Mar 30 2006, 05:44am hrs
Reliance Industries Limited (RIL), which has plans to induct a strategic partner for its new 29 million tonne a year refinery at Jamnagar in Gujarat, is currently in talks with global oil companies, including Chevron and Exxon Mobil, for an equity partnership.

California-based Chevron Corp is the worlds fifth largest integrated energy company while Exxon Mobil is the worlds largest publicly traded oil company. This will be the first foreign direct investment (FDI) by a global oil major in Indias booming refining sector. Earlier this month, UK-based BP Plc backed out of its commitment to buy equity in HPCLs Bhatinda refinery.

In lieu of a stake in its Rs 27,000 crore ($6 billion) plus refinery venture, RIL will seek assurance from the proposed strategic investor in two key areas - crude supplies for its export-oriented refinery and confirmed off-take of petroleum products for the overseas markets.

RIL chairman Mukesh Ambani is currently in the US meeting top executives of Chevron. Sources said Chevron chairman and chief executive David J OReilly met Mr Ambani on Tuesday. The RIL stock gained a marginal 0.37% or Rs 2.90 to end the day at Rs 793.95, after touching a high of Rs 797.40. A total of 6.41 lakh shares were traded on BSE on Wednesday. The stock has gained more than 12% in the last one month.

MUKESH'S MEGA PLAN

The new refinery will double RILs refining capacity to 12.5 lakh tonne
RPL plans to hit the market with an initial public offer in April
Post-IPO, RIL will hold 80% in RPL. A strategic partner will also be roped in
RIL wants partner to commit crude supplies and confirmed offtake

As RIL has been eyeing the multi-billion dollar high octane gasoline market in the US, Chevron not only brings steady source of crude supply for the refinery but may also pick a substantial volume of petroleum products from the new unit, sources said.

Petrol and diesel will make up 80% of the products produced by Reliance Petroleum Limited. However, bulk gasoline (petrol) will be converted into high octane gasoline for exports to the US. Typically, 70 per cent of the output will constitute auto fuels.

Also on Reliances radar is a possible technology pact with Chevron for sourcing some of the refining processes and possibly know-how for developing its D6 deep sea gas field in the Krishna Godavari Basin in the Bay of Bengal.