Mukesh Ambani-led Reliance Industries and global oil and gas major BP Plc have decided to extend their oil and gas sector tie up to the retail sector, with the formation of a new joint venture company that will include a retail service station network and aviation fuels business across India. The new venture will also look into innovative models like mobile fueling units and home delivery.
RIL and BP’s venture will incorporate and build on RIL’s current fuel retailing network across India, which the partners aim to grow rapidly to up to 5,500 sites over the next five years, said a company statement. Out of the total 6,802 fuel retail outlets run by private sector companies in India, around 20.5 per cent or 1,400 are currently with the RIL.
The partners have agreed to set up a new joint venture company, 51 per cent of which will be held by RIL and 49 per cent by BP, that will take over the ownership of RIL’s existing Indian fuel retail network and access its aviation fuel business. “It is anticipated that final agreements will be reached during 2019 and, subject to regulatory and other customary approvals, the transaction will be complete in the first half of 2020,” a company statement said.
RIL and BP have a long standing partnership, which began in 2011 and expanded in 2017, including an agreement to seek options to work together to develop differentiated fuels and mobility businesses. Mukesh Ambani, Chairman and Managing Director of Reliance Industries Limited, and Bob Dudley, Group Chief Executive of BP, signed heads of agreement for the new venture in Mumbai on Monday.
India is expected to be the fastest-growing fuels market in the world over the next 20 years, with the number of passenger cars in the country estimated to grow almost six-fold over the period. This joint venture will also include RIL’s aviation fuels business, which currently operates at over 30 airports across India, providing participation in this rapidly-growing market, an RIL statement said.
“This partnership is a testimony to the strong ties between BP and Reliance. Our robust partnership in developing gas resources in India has now expanded to fuel retailing and aviation fuels. This transformative partnership will deepen our engagement with the consumers in further enhancing the world-class services across the country,” Mukesh Ambani said.
BP will bring its international experience in convenience and fuel retailing and aviation operations. Castrol lubricants will also be available across the venture’s network. “The venture will seek to expand its reach, broadening access through mobile fuelling units and providing packaged fuels to customers, including home-delivery,” the company said. The venture is also expected to benefit from access to competitive fuels supplies from RIL’s Jamnagar refining complex in Gujarat on the west coast of India, the world’s largest refinery complex.
“India is set to be the world’s largest growth market for energy by the mid-2020s. BP is already a large investor here and we see further attractive, strategic opportunities to support this growth. We are working closely with Reliance to develop India’s gas resources, helping meet the country’s demand for that key fuel. Together we will work to provide consumers across India the high-quality fuels, convenience retail and services they need, continuing to drive modernisation and mobility solutions across the country,” Dudley said.