RIL set to enter fuel retailing in US, Europe

Anticipates better margins from direct sales.

Reliance Industries Ltd (RIL), the largest private sector company in the country, is set to enter fuel retailing in the US and Europe, almost a year after it closed retail operations in India.

The company plans to sell petrol directly to retail outlets in the US. After evaluating the US response, it will start selling diesel to bulk consumers in Europe, sources familiar with the developments said.

RIL is looking at floating subsidiaries for its operations in the US and European countries such as France, Italy, Germany and Switzerland. The company, which has trading desks in Houston, London, Singapore and Dubai, will set up more desks in the US and Europe. It will also set up separate marketing divisions for each country.

RIL is also believed to be in talks with fuel retailers such as Jiffy Lube and Hess Corporation for its US retail operations.

Selling petrol directly in the US market could save the company 5 to 10 per cent additional cost as traders’ commission, so the company has approached the US authorities for approvals to start direct fuel sales.

Asked about its overseas retail plans, an RIL spokesperson said, “We are looking at various options to enhance our operations across the globe. However, we cannot comment on specific initiatives.”

After closing its fuel retailing in India, RIL was supplying some products from its 33 million tonne a year Jamnagar refinery to the US and Europe. The second Jamnagar refinery, which has an annual capacity of 27 million tonne and is expected to go on full stream in a month, will increase supply in the overseas markets, sources said.

A company executive said unlike India, the price of petrol changed on a daily basis in the US. "In India, we don’t have a level playing field, since the government gives public sector oil marketing companies subsidies. Since the RIL refineries operate on better refining margins, we could earn more revenue from free markets,” he said, adding, “We have better understanding beyond a theoretical knowledge about the US and European markets after our long experience in these markets.”

For the past couple of months, RIL has been looking at acquiring a storage facility on the west coast of the US, the world's largest fuel consumer. The company is expected to conclude the acquisition in a month, sources said.

The company had recently started gasoline (petrol) trading operations in Houston for the US Gulf Coast and New York Harbor markets. Last month, RIL booked 1.3 million barrels of clean product storage in the New York Harbor area, the first time an Indian firm has taken storage in the US to store and trade petroleum products.

RIL recently commissioned its clean storage facility at the Ashkelon terminal in Israel to tap the Mediterranean and European markets. It has also leased clean oil products storages in Singapore and the Caribbean. The company owns a storage facility in Africa through its subsidiary, Gapco.