BP is already partnering RIL in its exploration and production ventures since 2011, when it bought a 30% stake in multiple RIL operated oil and gas blocks, including KG-D6, for $7.2 billion
The JV, where BP will have 49% ownership, will have the country’s largest private sector company’s existing fuel retailing sites and aims to own up to 5,500 such stations over the next five years. The financial details of the deal were not disclosed. The scope of the new JV also includes the aviation fuel business. At FY19-end, RIL had 1,372 fuel outlets across the country. Additionally, Reliance Retail – the company’s consumer retail chain – also operates 516 petrol pumps.
The JV plans to put more focus on door-step fuel delivery, the business model which RIL is already working on. Currently, RIL’s over 260 sites serve diesel in packaged containers to non-transport sector. The company already has all the requisite regulatory permits for launching diesel in high density polyethylene packs. It also expects to benefit from access to competitive fuels supplies from RIL’s 6.6 lakh barrel per day (bpd) capacity Jamnagar refining complex in Gujarat.
BP is already partnering RIL in its exploration and production ventures since 2011, when it bought a 30% stake in multiple RIL operated oil and gas blocks, including KG-D6, for $7.2 billion. The two companies are also equal partners in India Gas Solutions, a JV for sourcing and marketing of gas in the country.
“This transformative partnership will deepen our engagement with the consumers in further enhancing the world-class services across the country,” Mukesh Ambani, chairman and managing director, RIL, said. RIL registered 9.1% y-o-y growth in retail diesel and 21.8% in retail gasoline volume, compared to 2.6% and 8.1% for industry, respectively, in FY19.
The JV aims to tap the growing demand in the country which is seen to be the fastest-growing fuels market in the world over the next 20 years. “BP is already a large investor here and we see further attractive, strategic opportunities to support this growth,” said Bob Dudley, CEO, BP.
The London-based company has already earmarked retail as the most material part of its fuels marketing business and a significant source of earnings growth. Apart from India, BP plans to expand its retail business in Mexico, Indonesia and China. Rosneft-owned Nayara Energy, currently, has the largest private sector fuel retail network in India with over 4,900 operational outlets and more than 2,600 outlets at various stages of completion. BP has a 19.8% shareholding in Rosneft.
State-owned oil marketing companies are gradually losing auto fuel retail market share to private players in past few quarters. Axis Capital expects Indian petroleum products’ consumption to grow 3-4% annually in medium term, driven by under-penetration of passenger vehicles, rising per capita income, policy support and improvement in purchasing managers’ index.