Mumbai: India’s top private firm, Reliance Industries Ltd, hopes to commission its new 580,000 barrel per day (bpd) refinery by the second quarter of 2008 and aims to acquire oil retailing assets in the US and Europe, a top official said on 26 June.
The refinery was scheduled to be completed by December next year. It is being built by its subsidiary Reliance Petroleum Ltd, in which Chevron Corp. holds 5%.
The unit is located near Reliance Industries’ 660,000 bpd refinery, the world’s third-largest, at Jamnagar in the western state of Gujarat.
“The new refinery is likely to be commissioned in the second quarter of 2008. We are looking at Europe and the US for exports,” P.M.S. Prasad, president and CEO, petroleum, told Reuters in an interview.
The early finish to the refinery contrasts with a series of delays, setbacks and cancellations at other refinery projects around the world, in part due to higher costs and a strained contractor industry.
Prasad said Reliance, which is already exporting gasoline to Iran, Kuwait, Saudi Arabia and UAE, sees a good market for diesel with very low sulphur content in Europe and expects buyers to blend it with lower quality fuel to meet specifications.
Reliance is also keen to acquire oil retailing assets or companies in the United States and Europe, Prasad said speaking in his swanky top-floor office on the outskirts of Mumbai, to which he often travels by helicopter.
The company’s network of petrol stations in India had captured 15% of the market last year but subsidised sales by state-run Indian Oil Corp., Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd hurt its operations.
“Our experience in India has given us expertise and understanding of the situation in a developing country,” he said.
Reliance is also optimistic about a steady start for gas production in its deep-sea field in the Krishna-Godavari basin off India’s east coast.
The field, which will double India’s natural gas output when it starts pumping 80 million cubic metres a day next year, is being developed at a cost of $5.2 billion.
Prasad said Reliance had obtained government approval to spend another $3.6 billion to maintain the field after it starts production.
Only a handful of towns and cities in India have gas distribution networks and millions of households use cylinder gas for cooking. Gas finds off the east coast, including Reliance’s, are expected to boost natural gas use around the country.
Reliance was in talks with state-run Indian Oil Corp. and GAIL (India) Ltd for city gas distribution projects, Prasad said.
Britain’s BG Group was also keen to distribute gas in Indian cities.
Reliance was also in talks with Chinese firms to introduce gas-based home appliances in India, he said, adding that another group company, Reliance Retail Ltd, would also be involved in this. He did not give more details.
The Indian rupee has appreciated about 8% against the dollar since the start of the year and Prasad said its strength would help the firm as a large component of its capital expenditure, about $20 billion, was in dollars. This includes the new refinery, a new cracker project and exploration and production expenditure.
However, the company also has strong dollar earnings from exports, which accounted for 61 percent of its revenue in the January-March quarter.
Shares in Reliance Industries were up 0.3% at Rs1,711.80 by 0820 GMT, while its subsidiary Reliance Petroleum was up 2% at Rs102.80 in a firm Mumbai market.
Reliance Industries shares have gained close to 70% over the last year, giving the firm a market value of about $58.6 billion.