Reliance Industries creates business unit from petroleum to chemicals, Energy News, ET EnergyWorld
Reliance first reported the integrated earnings of the O2C business in its third quarter financial results. Previously, refining and petrochemical activities were reported separately, while fuel retail revenues were part of the overall retail activities of the company.
In the October-December 2020 income statement, the profits of refining and petrochemical companies as well as retail fuel companies were reported as one. As a result, he did not give refining margins – the most sought-after number to assess the company’s oil refining activity.
“The reorganization of refining and petrochemicals as petroleum chemicals (O2C) reflects a new strategy as well as a management matrix,” the company said in a presentation to investors after the results were obtained.
This, he said, “will facilitate holistic and agile decision making” as well as “pursue attractive growth opportunities with strategic partnerships”.
Last year, Reliance began work on moving the O2C business to a separate unit with a view to a possible sale of stake in companies like Saudi Aramco.
It values the O2C business at $ 75 billion and is in talks with Saudi Arabian Oil Co (Aramco) for the sale of a 20% stake.
The company, however, did not mention discussions with Aramco, which reportedly encountered a barrier to the valuation.
The reorganization “would lead to a more downstream evolution and closer to customers” and “would provide sustainable and affordable energy and material solutions to meet India’s growing needs,” the company said in the presentation.
Reliance O2C Limited is home to petroleum and petrochemical refining and manufacturing assets, bulk and wholesale fuel marketing, and Reliance’s 51% stake in the retail fuel joint venture with UK BP .
The O2C unit also houses the company’s petroleum trading and marketing subsidiaries in Singapore and the UK, Reliance Industries Uruguay Petroquimica SA.
It is also home to Reliance Ethane Pipeline Limited which operates a pipeline between Dahej in Gujarat and Nagothane in Maharashtra as well as 74.9 per cent of the shares held by Reliance in the joint venture with Sibur.
Its very large ethane carriers, its gas pipelines such as the one that transports coal bed methane from its CBM blocks, offshore oil and gas asset holding company Reliance Industries (Middle East) DMCC, and domestic exploration and production assets would not be part of the O2C unit.
In addition, Reliance’s textile business as operated at the Naroda site, Baroda Township and land including cricket stadium, Jamnagar power assets and Sikka Ports and Terminals Limited would not do no longer part of the O2C unit.
Ambani had said in July 2019 that the process of transforming O2C into a separate subsidiary would be completed by early 2021. Reliance owns and operates sister oil refineries in Jamnagar, Gujarat, with a combined capacity of 68, 2 million tonnes per year.
It is also the country’s largest petrochemical maker with units in Jamnagar, Dahej, Hazira, Nagothane, Vadodara, Patalganga, Silvassa, Barabanki and Hoshiarpur.
The company owns a 66.6% stake in the KG-D6 block where it is investing approximately USD 5 billion in the development of a second round of gas discoveries with BP.
It also owns a similar stake in the NEC-25 block in the Bay of Bengal and operates two CBM blocks in Madhya Pradesh. These upstream assets are not part of the O2C unit.
“Reliance O2C (is) one of the most integrated manufacturers of fuels, chemicals and value-added materials,” the presentation reads. “O2C to maximize downstream, reduce transport fuels and create clean and green energy platforms. “