New Delhi: Eight years after they partnered to produce hydrocarbons in India, Reliance Industries Ltd and British oil major BP Plc have come together again to open a nationwide network of fuel retailing outlets.
The outlets will be set up through a new joint venture company that will be owned 51% by RIL and the remainder by BP, according to a joint statement issued by the companies. The partnership will also market aviation turbine fuel to cater to India’s growing aviation industry.
Together, the companies plan to set up 5,500 fuel retail stations across the country, which may include the 1,378 retail outlets RIL independently runs across India at present.
RIL and BP did not disclose the investments in the new venture. They also did not provide a time frame for setting up the outlets.
Mint had on 6 December 2016 reported that the two companies may join hands to build a retail network in India.
“Building on Reliance’s existing Indian fuel retailing network and an aviation fuel business, the partners expect the venture to expand rapidly to help meet the country’s fast-growing demand for energy and mobility," RIL said in the statement.
Mukesh Ambani, chairman and managing director of RIL and Bob Dudley, group chief executive of BP, signed the heads of agreement for the joint venture in Mumbai on Tuesday. “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," Ambani said.
BP received a licence to market jet fuel in India in January 2016. In October 2016, it received a licence to set up 3,500 fuel retail outlets in India. RIL holds a licence to open 5,000 fuel outlets and plans to double its market share in the fuel retail segment from the present 7-8% share.
There is no clarity whether these licences can automatically be folded into the new venture.
“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," RIL said.
Final agreements will be reached during 2019 and, subject to regulatory and other customary approvals, the transaction will be completed in the first half of 2020.
BP is RIL’s partner in its exploration and production ventures in the country. In February 2011, London-based BP bought a 30% stake in 21 oil and gas production-sharing contracts operated by RIL for $7.2 billion. The two are also partners in India Gas Solutions Pvt. Ltd, an equal joint venture for sourcing and marketing of gas in the country.
India is one of the few major global markets where fuel demand is growing and has attracted attention from foreign fuel retailers seeking to gain a toehold in a country where fuel retailing is dominated by state-run companies.
Dudley said: “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. Together, we will work to provide consumers across India the high-quality fuels, convenience retail and services they need, continuing to drive modernization and mobility solutions across the country."
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.