Bangalore: Reliance Industries Ltd (RIL), which recently said it was shutting down its fuel stations in India, plans to set up a storage and distribution base in Europe in an effort to sell its petroleum products to customers there.
The Mukesh Ambani-led group is looking at locations in the Antwerp and Ghent ports in the Flanders region of Belgium. It is in talks with the port authorities and specialist tank storage firms such as Oiltanking GmbH to store and distribute products shipped from its 33 million tonnes (mt) a year refinery at Jamnagar in Gujarat.
Reliance currently exports about 17mt a year of products from its refinery—a 100% export-oriented unit. By the end of the year, the company will start operations at another $6 billion, 28mt a year refinery at Jamnagar, making it the largest refining location in the world.
The company recently closed down its 1,432 fuel stations because it has not been able to compete with state-owned firms that sell petrol and diesel at subsidized prices. These firms are compensated by the government.
Greener pastures? A Reliance petrol pump in Punjab. The firm recently closed down 1,432 fuel stations because it has not been able to compete with state-owned firms that sell petrol and diesel at subsidized prices. ((Ramesh Pathania / Mint)
Private firms such as Reliance are not eligible for such compensation but are free to price their products.
However, the fuel retailing business is dominated by state-owned firms and private firms selling petrol and diesel at higher rates have little chance of success. Reliance is now under pressure to find a market for its petrol products, which are Euro 5 (meet the fifth edition of European Union norms) compliant and so less polluting.
“We are looking at Antwerp port as a bulk petroleum products importing location because of the good hinterland logistics surrounding the port,” Aseem Pratap Singh, general manager, international business division, RIL, told port officials gathered at the headquarters of Antwerp Port Authority in Belgium on 5 May for a business meeting.
Antwerp, Europe’s second-biggest port and the world’s fourth largest, lies on the river Scheldt, about 80km from the sea. “As we are closer to the hinterland, there is already a cost saving if goods are to be delivered to consumption areas,” said Luc Arnouts, chief commercial officer, Antwerp Port Authority.
About 180 million consumers representing more than half the European market live within 500km of the port.
The major industrial and population centres of southern England, northern France, Benelux and northern Germany are within 200km.
Antwerp has adequate storage capacity unlike some other European ports facing a space crunch, said Raj Khalid, the port’s India representative.
Antwerp has tanks run by firms such as Germany’s Oiltanking and Dutch firm Vopak NV offering storage capacity of more than 3.6 million cu. m. Vopak is the world’s top liquid cargo storage and handling firm.
Antwerp handled 39.6mt of liquid bulk cargo including petroleum products in 2007, accounting for about 22% of the total 182.9mt of cargo that was handled at the port in 2007. It is thirsty for more.
“We are ready to offer land to Reliance to set up storage tanks in the port so there is competition in this area,” Eddy Bruyninckx, chief executive of Antwerp Port Authority told Mint on 5 May after a meeting with Reliance executives.
Reliance also has the option of striking a deal with one of the tank storage specialists operating in the port and making use of their facilities, Bruyninckx said.
“Reliance has started talks with us for setting up storage facilities in Antwerp port and nearby Ghent port. These are ideal locations due to good hinterland connectivity,” said Jo Verellen, a manager at the world’s second-biggest tank storage firm Oiltanking.
(This correspondent was at Antwerp in Belgium recently as a guest of the Antwerp Port Authority.)