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

Billionaire Mukesh Ambani’s Reliance Industries Ltd has done spin-off of the firm’s oil-to-chemical enterprise into a new unit that will aid it pursue expansion possibilities with strategic partnerships, the firm has said.

The oil-to-chemical (O2C) enterprise unit holds Reliance’s oil refinery and petrochemical belongings and retail fuel enterprise but not upstream oil and gasoline manufacturing fields such as KG-D6 and textiles enterprise.

Reliance for the very first time described integrated earnings of the O2C enterprise in its 3rd quarter fiscal final results. Formerly, refining and petrochemical organizations were being described individually while fuel retailing earnings was component of the firm’s over-all retail enterprise.

In the Oct-December 2020 earnings statement, refining and petrochemical as perfectly as fuel retailing organizations earnings were being described as one particular. As a outcome, it did not give refining margins – the most sought after number to assess the firm’s oil refining enterprise.

“Reorganising refining and petrochemicals as oil-to-substances (O2C) demonstrates new strategy as perfectly as administration matrix,” the firm said in a submit earning investor presentation.

This, it said, will “facilitate holistic and agile final decision producing” as perfectly as “pursue eye-catching possibilities for expansion with strategic partnerships”.

Reliance started off perform on hiving off the O2C enterprise into a independent unit past 12 months for a doable stake sale to organizations such as Saudi Aramco.

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

The firm, on the other hand, did not mention conversations with Aramco, which are said to have strike a valuation roadblock.

The reorganisation would “generate the transfer toward even further downstream and closer to buyers” and “deliver sustainable and affordable vitality and resources remedies to meet India’s growing requirements,” the firm said in the presentation.

Reliance O2C Confined homes oil refining and petrochemical crops and manufacturing belongings, bulk and wholesale fuel internet marketing, and Reliance’s 51 for every cent curiosity in retail fuel joint venture with BP of the British isles.

The O2C unit also homes the firm’s Singapore and the British isles-based oil investing subsidiaries and internet marketing subsidiary, Reliance Industries Uruguay Petroquimica SA.

It also homes Reliance Ethane Pipeline Confined that operates a pipeline involving Dahej in Gujarat and Nagothane in Maharashtra as perfectly as seventy four.9 for every cent stake that Reliance holds in the joint venture with Sibur.

Its incredibly large ethane carriers, gasoline pipelines such as one particular that transports coal-mattress methane from its CBM blocks, overseas oil and gasoline asset holding firm Reliance Industries (Center East) DMCC, and domestic exploration and creation belongings would not sort component of the O2C unit.

Also, Reliance’s textiles enterprise as operated out of the Naroda site, Baroda township and land, together with cricket stadium, Jamnagar electrical power belongings, and Sikka Ports and Terminals Confined would also not be component of the O2C unit.

Ambani had in July 2019 mentioned that the process of spinning of O2C into a independent subsidiary would be done by early 2021.

Reliance owns and operates twin oil refineries at Jamnagar in Gujarat, with a blended capability of 68.2 million tonnes for every annum.

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

The firm holds a 66.six for every cent stake in the KG-D6 block wherever it is investing about USD 5 billion in establishing a next set of gasoline discoveries along with BP.

It also has a related stake in the NEC-25 block in the Bay of Bengal and operates two CBM blocks in Madhya Pradesh. These upstream belongings are not component of the O2C unit.

“Reliance O2C (is) one particular of the most integrated brands of value-included fuels, substances and resources,” the presentation said. “O2C to increase downstream, lessen transportation fuels and generate clear and green vitality platforms.