RIL and BP likely to form fuel retail venture soon
MUMBAI: A year after BP Plc received in-principle approval to launch its fuel retail business in India, the oil giant is working along with partner Reliance Industries Ltd (RIL) to begin operations in a few months, three people with knowledge of the matter said.
BP is RIL’s partner in its exploration and production, and gas-sourcing businesses.
Last October, BP received approval and licence to set up 3,500 fuel retail outlets.
“Discussions are on between RIL & BP. BP has a long-term view on India. In fact, BP with its own fuel retail license, can venture into the segment on its own. However, sourcing of fuel is an area that BP has to look into and thus may be seeking a co-branding with RIL,” said the first person cited above, a consultant with an advisory firm. He spoke on condition of anonymity.
BP did not respond to an email sent on October 17.
“Discussions are going (on) and am sure we will agree upon all the contours that we expect to get done. So either it (the venture) comes before mid or end of next quarter,” V Srikanth, joint chief financial officer at RIL, had said after the company’s second quarter earnings on October 13.
Srikanth said all aspects (of branding and ownership) are part of the discussions.
Last July, RIL hived off company-owned fuel retail outlets and merged them with its organised retail arm as part of a strategy to expand retail offerings at petrol pumps.
During the second quarter of this fiscal, RIL’s revenue from the retail segment grew by 81.3% on year to ₹14,646 crore. “The increase in turnover was led by growth in digital, fashion and lifestyle and petroleum products,” RIL said in its secondquarter earnings statement on October 13.
London-based BP had bought a 30% stake in 21 oil and gas production-sharing contracts operated by RIL for $7.2 billion in February 2011. RIL and BP are also partners in India Gas Solutions, an equal joint venture for sourcing and marketing of gas in India. Besides, BP has a presence in India through its automotive and industrial lubricant brand Castrol.
This January, BP was given 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 mini- mum investment of ₹2,000 crore in exploration or production, refining, gas or product pipeline, or terminals.
“BP meets this criteria. Besides, India is an attractive market for international players as it is one of few the destinations that is seeing growth in terms of petroleum consumption. We see the participation from international players only increasing going forward,” said an executive director from one of the state-run oil marketing firms on condition of anonymity.
India has 57,000 petrol pumps. The majority are owned by the state-run Indian Oil Corp Ltd, Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd. Private sector operators include RIL, Royal Dutch Shell and Rosneft (the erstwhile Essar Oil).