Reliance Uncovers Oil-to-Chemical Business Spin-off Plan

By siliconindia  |  Wednesday, 09 September 2020, 10:50:01 AM IST

Reliance Uncovers Oil-to-Chemical Business Spin-off Plan
Reliance Industries has begun its work to segregate the oil-to-chemical (O2C) business into a separate unit. The company's O2C unit would have its own oil refinery and petrochemical assets and retail fuel business. But, it would not upstream oil and gas producing fields such as KG-D6 and textiles business. Further, Reliance has made possible stake sales to companies like Saudi Aramco. 
The company's O2C unit would have oil refining and petrochemical plants and manufacturing assets, bulk, and wholesale fuel marketing. Alongside, the O2C unit would also house RIL's Singapore and the UK-based oil trading and marketing subsidiary, Reliance's Uruguay Petroquimica SA. Furthermore, the new O2C unit will also have Reliance on Ethane Pipeline Ltd that functions as a pipeline between Dahej in Gujarat and Nagothane in Maharastra. Also, it holds a 74.9 percent stake that the company posses in the joint venture with Sibur. 
According to the Scheme of Arrangement, the company's 51 percent interest in retail fuel joint venture with BP of the UK. 
However, Reliance's huge ethane carriers, gas pipelines like the one that is used to transports coal-bed methane from its CBM blocks, overseas oil, and gas asset holding company Reliance Industries (Middle East) DMCC, and domestic exploration and production assets and the company's textiles business as operated out of the Naroda site, Baroda township and land, including cricket stadium, Jamnagar power assets, and Sikka Ports and Terminals Ltd would not be part of the new O2C unit. 
Commenting on hiving off, the company states, "The nature of risk and returns involved in the O2C business are distinct from those of the other businesses of RIL and the O2C business attracts a distinct set of investors and strategic partners." 
Reliance values the new O2C business at $75 billion and has been in talks with the Saudi Arabian oil company for a deal of a 20 percent interest. Alongside this, the company is also exploring various other opportunities to attract investors. 

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