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Reliance to sell stakes in 6 firms operating ethane ships to Mitsui

Press Trust of India  |  New Delhi 

will sell stakes in firms that own its fleet of very large carrying ships to Japan's OSK Lines (MOL) for an undisclosed sum of money.

In a statement, said its Singapore-incorporated subsidiary Reliance Holding Pte Ltd (REHPL) has signed "binding definitive agreements for a strategic investment by MOL" and an unnamed strategic minority investor in six limited liability

REHPL owns these six limited liability which are special purpose vehicles that own the Very Large Carriers (VLECs).

It did not give financial details of the deal.

"Transaction closing is subject to regulatory approvals. Post-closing, SPVs shall be jointly controlled by REHPL and MOL," the statement said.

Reliance imports some 1.6 million tonne of ethane from the US to replace and naphtha as feedstock at its petrochemical plants in

Use of ethane, a component that is produced in large volumes in after the shale gas revolution, has reduced the company's petrochemicals feedstock cost by about 30 per cent.

It in 2017 began receiving consignment or cargo of ethane from the US. VLECs are used to transport liquefied ethane from the US to the at Dahej in Gujarat.

Reliance, which used 2.5 million tonne a year of naphtha as feedstock in petrochemical crackers, has contracted ethane supplies for more than 20 years from the US. Ethane reduced naphtha usage by 5,00,000 tonne.

Ethane is used as feedstock in the company's crackers in Dahej and Hazira in Gujarat and Nagothane in

Reliance had in 2014 ordered building of six VLECs at Samsung Heavy Industries' shipyards in Korea. Japan's biggest company OSK Lines will manage and operate the ships for

"Given MOL is currently the operator of all the six VLECs, investment by MOL will deepen our relationship with them and ensure continued safe and efficient operations of the VLECs.

"We welcome MOL as a strategic into the SPVs as they move beyond the current operator role to the joint owner and operator role in the SPVs," P M S Prasad, Executive Director, RIL, said.

Takeshi Hashimoto, Member of the Board, Executive Vice President, MOL said, the investment would enable MOL to add six unique VLECs, which the company has been operating for some time now, as owners to its existing fleet of over 850 vessels.

These vessels include LNG carrier, other tankers, dry bulkers, car carriers, ferries, and coastal RoRo ships and cruise ships, Hashimoto added.

"MOL has detailed knowledge about these assets having supervised the construction and delivery of the six VLECs and subsequently operating them since their delivery. We are therefore happy and look forward to using this strategic opportunity to be a joint owner and to significantly strengthen our existing relationship with Reliance," he said.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, April 17 2019. 14:35 IST