BP-RIL tie-up likely for fuel retail venture

Mumbai: Oil giant BP Plc. may join hands with Reliance Industries Ltd (RIL) to launch its fuel retail business in India, two people in the know said. BP is RIL’s partner in its exploration and production, and gas-sourcing businesses. 

Last month, BP got in-principle approval and licence to set up 3,500 fuel retail outlets. In a 14 October tweet, BP said, “A significant step in BP’s partnership with India... been granted licence to market motor spirit and high speed diesel.” 

“BP has been RIL’s partner in the country for the past five years and may partner RIL for its fuel retail foray too,” said one of the two people cited above, a consultant with an advisory firm. He spoke on condition of anonymity. 

RIL and BP did not reply to emails sent on 25 November.

In February 2011, London-based BP had bought a 30% stake in 21 oil and gas production-sharing contracts operated by RIL for $7.2 billion.

 “Obviously, we are partners and we will look at all possible options. We have been discussing the retail foray. There are many possibilities,” said the second person, also on condition of anonymity.

RIL and BP are also partners in India Gas Solutions, an equal joint venture for sourcing and marketing of gas in the country. Besides, BP has a presence in India through its automotive and industrial lubricant brand Castrol.

This January, BP got in-principle approval to sell aviation turbine fuel in India. To get a licence to retail auto fuel in India, a firm should have a minimum investment of Rs2,000 crore in exploration or production, refining, gas or product pipeline, or terminals. “India is an attractive market for international players as it is one of the very few markets which is growing in terms of petroleum consumption. The entry of new players is not a deterrent for the oil marketing companies as our network and infrastructure is far more robust and spread out than that of private players,” said the marketing director of a state-run oil marketing firm on condition of anonymity. 

India has around 56,186 petrol pumps. State-owned Indian Oil Corp. Ltd runs 25,363 retail outlets; Hindustan Petroleum Corp. Ltd 13,802; and Bharat Petroleum Corp. Ltd 13,439 outlets. Private sector operators including Essar Oil and RIL, between them, run 3,582 retail outlets.