RIL to acquire BPs petrochem plant in Malaysia for $230 m

Written by fe Bureau | Mumbai | Updated: Sep 29 2012, 09:15am hrs
Billionaire Mukesh Ambani-led Reliance Industries on Friday agreed to acquire British oil & gas explorer BPs petrochemical plant in Malaysia for $230 million (R1,214.33 crore) in an all-cash deal.

RIL will purchase all of BPs interests in a purified terepthalic acid or PTA production plant via its subsidiary Reliance Global Holdings. The agreement covers BPs 100% equity in BP Chemicals (Malaysia) or BPCM. The plant is located on the east coast of Malaysia.

The transaction is expected to be completed in 2012. RIL and BP are already partners in oil hunt in India, and are jointly developing oil and gas blocks blocks in the Krishna Godavari D6 basin. RIL had sold a 30% stake in 21 oil and gas blocks in 2011 for $7.2 billion. The deal also included a future performance payment of $1.8 billion made on exploration success that result in developments of commercial discoveries.

This is an efficient plant with a good market position in the region, said James Yim, head of BPs aromatics business in Asia.

RECRON Malaysia, part of the Reliance group, is already our largest customer in Malaysia and RIL is a significant feedstock supplier to the plant, so Reliance is a natural owner of this plant.

BPCMs PTA plant in Malaysia was commissioned in 1996 and has a production capacity of 610,000 tonnes per annum.

The staff at the plant will be shifted to the new owners under equivalent terms and conditions, BP said in a statement. RIL is sitting on a cash pile of R70,000 crore. The oil to retail conglomerate is planning to invest $8 billion on adding capacities of PFY, PET, polyester and chemicals like PTA and paraxylene in the next 4-5 years.

In May, the company had also raised $2 billion from German banks for its petrochemical plant expansion at Jamnagar, Hazira, Silvassa and Dahej. The petrochemical business revenue of R80,625 crore accounted for 23.7% of RILs annual revenues of R3,39,792 crore in fiscal 2011-12. During the first quarter of the 2012-13 fiscal, the petrochemical business of RIL had revenues of R21,839 crore, 23% of the groups total revenues of R94,926 crore.

BP kicked off a $38-billion divestment programme in 2010 to reposition itself as a smaller company with focus on promising markets, and to raise cash to shore up investor confidence. Since then, it has divested assets worth $33 billion. On Friday, shares of RIL closed 0.78% higher at R 836.70 on the BSE.