Reliance Industries spins off oil-to-chemical business into new unit

Billionaire Mukesh Ambani’s Reliance Industries Ltd has concluded spin-off of the firm’s oil-to-chemical company into a new device that will assist it go after growth alternatives with strategic partnerships, the company has reported.

The oil-to-chemical (O2C) company device retains Reliance’s oil refinery and petrochemical assets and retail gasoline company but not upstream oil and gas producing fields these types of as KG-D6 and textiles company.

Reliance for the very first time described built-in earnings of the O2C company in its third quarter economic outcomes. Earlier, refining and petrochemical firms had been described independently whilst gasoline retailing revenue was portion of the firm’s all round retail company.

In the October-December 2020 earnings assertion, refining and petrochemical as perfectly as gasoline retailing firms earnings had been described as a single. As a final result, it did not give refining margins – the most sought just after variety to assess the firm’s oil refining company.

“Reorganising refining and petrochemicals as oil-to-chemical compounds (O2C) demonstrates new system as perfectly as administration matrix,” the company reported in a publish earning trader presentation.

This, it reported, will “aid holistic and agile conclusion building” as perfectly as “go after appealing alternatives for growth with strategic partnerships”.

Reliance began operate on hiving off the O2C company into a individual device final 12 months for a doable stake sale to corporations these types of as Saudi Aramco.

It values the O2C company at USD 75 billion and has been in talks with Saudi Arabian Oil Co (Aramco) for sale of a twenty per cent fascination.

The company, however, did not point out conversations with Aramco, which are reported to have strike a valuation roadblock.

The reorganisation would “travel the move in the direction of further downstream and closer to consumers” and “deliver sustainable and affordable electricity and components methods to meet India’s growing desires,” the firm reported in the presentation.

Reliance O2C Confined residences oil refining and petrochemical plants and production assets, bulk and wholesale gasoline marketing, and Reliance’s 51 per cent fascination in retail gasoline joint undertaking with BP of the United kingdom.

The O2C device also residences the firm’s Singapore and the United kingdom-based mostly oil buying and selling subsidiaries and marketing subsidiary, Reliance Industries Uruguay Petroquimica SA.

It also residences Reliance Ethane Pipeline Confined that operates a pipeline among Dahej in Gujarat and Nagothane in Maharashtra as perfectly as seventy four.9 per cent stake that Reliance retains in the joint undertaking with Sibur.

Its very massive ethane carriers, gas pipelines these types of as a single that transports coal-bed methane from its CBM blocks, abroad oil and gas asset keeping company Reliance Industries (Middle East) DMCC, and domestic exploration and production assets would not sort portion of the O2C device.

Also, Reliance’s textiles company as operated out of the Naroda web site, Baroda township and land, which include cricket stadium, Jamnagar electrical power assets, and Sikka Ports and Terminals Confined would also not be portion of the O2C device.

Ambani experienced in July 2019 mentioned that the course of action of spinning of O2C into a individual subsidiary would be concluded by early 2021.

Reliance owns and operates twin oil refineries at Jamnagar in Gujarat, with a blended capacity of sixty eight.2 million tonnes per annum.

It is also the country’s greatest petrochemical company with units at Jamnagar, Dahej, Hazira, Nagothane, Vadodara, Patalganga, Silvassa, Barabanki, and Hoshiarpur.

The company retains a sixty six.six per cent stake in the KG-D6 block the place it is investing about USD five billion in producing a second set of gas discoveries along with BP.

It also has a related stake in the NEC-twenty five block in the Bay of Bengal and operates two CBM blocks in Madhya Pradesh. These upstream assets are not portion of the O2C device.

“Reliance O2C (is) a single of the most built-in companies of price-additional fuels, chemical compounds and components,” the presentation reported. “O2C to increase downstream, reduce transportation fuels and build clean and eco-friendly electricity platforms.