Reliance and BP have entered into a new JV in order to meet India’s fast-growing demand for energy and mobility. Together, the companies aim at increasing RIL’s current fuel retailing network of over 1,400 sites across India to 5,500 sites over the next five years.
India – BP and Reliance Industries Ltd (RIL) have recently announced that they have agreed to form a new joint venture that will include a retail service station network and aviation fuels business across India. Building on Reliance’s existing Indian fuel retailing network and an aviation fuel business, the partners expect the venture to expand rapidly in order to help meet the country’s fast-growing demand for energy and mobility.
This is a further development of RIL and BP’s longstanding partnership, which began in 2011 and expanded in 2017 in order to seek options of working together to develop differentiated fuels and mobility businesses.
India is expected to be the fastest-growing fuels market in the world over the next 20 years, with the number of passenger cars in the country estimated to grow almost six-fold over the period. RIL and BP’s venture will incorporate and build on RIL’s current fuel retailing network of over 1,400 sites across India, which the partners aim to grow rapidly to up to 5,500 sites over the next five years.
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. Mukesh Ambani, Chairman and Managing Director of Reliance Industries Ltd and Bob Dudley, Group Chief Executive of BP, signed heads of agreement for the venture in mumbai recently.
Mukesh Ambani said: “We are delighted to expand our partnership with BP, one of the global leaders in the fuel-retailing sector. This partnership is a testimony to the strong ties between BP and Reliance. 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 consumers in further enhancing world-class services across the country.”
Bob 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. We are working closely with Reliance to develop India’s gas resources in order to meet the country’s demand for that key fuel. Together we will work to provide consumers across India with high-quality fuels along with convenience retail and services, thus continuing to drive modernisation and mobility solutions across the country.”
The partners have agreed to set up a new joint venture company (51 % will be held by RIL and 49 % by BP) which will assume ownership of RIL’s existing Indian fuel retail network and access its aviation fuel business.
It is anticipated that the final agreement will be completed in 2019, subject to regulatory as well as other customary approvals, and the transaction will be completed in the first half of 2020.
The new venture will seek to offer high-quality differentiated fuels and services at its network of sites, benefitting from RIL’s extensive retail business experience and market-leading access and digital connection to consumers through its Jio digital platform.
BP will bring its international experience in convenience and fuel retailing as well as aviation operations. Castrol lubricants will also be available across the venture’s network. The venture will seek to expand its reach, broadening access through mobile fuelling units and providing packaged fuels to customers, including home-delivery.
The venture is also expected to obtain access to competitive fuels supplies from RIL’s Jamnagar refining complex in Gujarat on the west coast of India, the world’s largest refinery complex.
After initial co-operation in 2008, BP and RIL entered into their current partnership in 2011 when BP acquired a 30 % interest in RIL’s portfolio of exploration and production interests offshore India, including the KG D6 gas-producing block off the east coast. More recently, since 2017 the partners have sanctioned three new gas developments in the KG D6 block.