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Reliance to set up World No. 1 oil refinery
By agencies
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Thursday, 04 August 2005, 19:30 IST
MUMBAI: Reliance Industries Ltd., India's biggest private-sector oil refiner, will spend $5.8 billion to double capacity at its Jamnagar unit, making it the world's single largest refinery.
The increase announced by the company would make the move one of the world's biggest export-oriented expansions in refining this decade.
The rise in Jamnagar's crude throughput to 1.2 million barrels per day (bpd), primarily for exports, would be completed by U.S. construction firm Bechtel by October 2008.
"Reliance Industries is implementing a two-fold strategy: strengthening the petroleum retailing business and enlarging the refining capacity," Chairman Mukesh Ambani told shareholders.
Reliance shares slipped 3.8 percent to 713.70 rupees, having risen 24 percent in the past month to an all-time high of 760 rupees earlier in the day. The market was disappointed after betting on a major acquisition by Reliance.
Refiners across the globe are enjoying a two-year boom in profit margins, but many remain wary of over-investing in the highly cyclical industry after a decade of mediocre returns stemming from overcapacity in the 1990s.
Reliance operates 550 petrol stations across the country, which will rise to 1,500 by next March.
"A world-class petroleum refinery and retailing business, combined with sizeable oil and gas assets, enables Reliance to chart a course, a path to becoming a global hydrocarbon major while addressing India's energy security needs," Ambani said.
Reliance will also spend 
176 billion ($4.1 billion) in oil and gas exploration and production over four to five years.
Ambani said Reliance would begin gas production from its prolific exploration block in the Krishna Godavari basin, off India's east coast, in 2009/10, starting at a rate of about 40 million cubic meters of gas per day.
This represents a delay of three years since its 2003 announcement of a production deadline of 2006/07, though Reliance has committed to supply gas to its first customer, state-owned National Thermal Power Corp., by next fiscal year.
Reliance will continue exploring in India and abroad, including its exploration blocks in Oman and Yemen. Ambani said there had been three onshore oil discoveries in Yemen, which would produce an 5,000 to 8,000 bpd this year.
India's largely state-owned oil sector has expanded both to meet rising domestic demand and to maintain its share of the export market, a far more lucrative business due to domestic price caps.
India first became a net oil exporter after Reliance started up Jamnagar at the end of the 1990s.
The Jamnagar expansion plans are rivaled only by Taiwan's Formosa Plastic Group's tentative plans to build a new 600,000 bpd refinery near an existing plant, and a new $3.5 billion to $5 billion facility in Kuwait, set for completion in 2010.
Reliance also announced plans to raise its capacity for petrochemicals such as polypropylene, polyester fibre and purified terephthalic acid.
176 billion ($4.1 billion) in oil and gas exploration and production over four to five years.
Ambani said Reliance would begin gas production from its prolific exploration block in the Krishna Godavari basin, off India's east coast, in 2009/10, starting at a rate of about 40 million cubic meters of gas per day.
This represents a delay of three years since its 2003 announcement of a production deadline of 2006/07, though Reliance has committed to supply gas to its first customer, state-owned National Thermal Power Corp., by next fiscal year.
Reliance will continue exploring in India and abroad, including its exploration blocks in Oman and Yemen. Ambani said there had been three onshore oil discoveries in Yemen, which would produce an 5,000 to 8,000 bpd this year.
India's largely state-owned oil sector has expanded both to meet rising domestic demand and to maintain its share of the export market, a far more lucrative business due to domestic price caps.
India first became a net oil exporter after Reliance started up Jamnagar at the end of the 1990s.
The Jamnagar expansion plans are rivaled only by Taiwan's Formosa Plastic Group's tentative plans to build a new 600,000 bpd refinery near an existing plant, and a new $3.5 billion to $5 billion facility in Kuwait, set for completion in 2010.
Reliance also announced plans to raise its capacity for petrochemicals such as polypropylene, polyester fibre and purified terephthalic acid.