Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you a link to reset your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you a link to reset password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Oil

Analysis: Reliance, BP venture may have an edge in India's retail fuel market

Biofuels | Renewables | LNG | Natural Gas | Oil | Petrochemicals | Marine Fuels | Tankers

APPEC 2020

Oil

Platts Market Data – Oil

Commodities | Agriculture | Biofuels | Natural Gas | Oil | Refined Products | Shipping

S&P Global Platts Forum de Energia do Nordeste

Natural Gas | Natural Gas (North American) | Oil | Crude Oil | Refined Products

Western US Gulf of Mexico evacuations beginning ahead of tropical storm

Analysis: Reliance, BP venture may have an edge in India's retail fuel market

Highlights

New JV to include retail fuel, convenience retailing and aviation fuels in India

It will have access to fuels supplies from Reliance's 1.2 million b/d Jamnagar facility

BP, Reliance together can compete with state refiners better: analysts

Singapore — BP and Reliance have taken their partnership one step further by venturing into India's retail oil market together, a move analysts said would give the two companies an edge to compete due to the oil major's vast experience in fuel marketing and the Indian firm's strong local footprint.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

In a sector largely dominated by state refiners, the move will also pit Reliance and BP against other global firms, such as Shell, which already has a presence in India's retail fuel market, and private domestic players, like Nayara Energy, which is also aiming for a bigger slice of the market.

"BP is seeking to expand its foothold in India's growing markets, and partnering with Reliance looks appealing as it will allow access to the domestic Indian market," Lim Jit Yang, advisor for oil markets at S&P Global Platts Analytics, said.

"In addition, the tightening of product specifications in April 2020 to Euro 6 equivalent for on-road fuels would make the domestic retail market more attractive for Reliance, instead of exporting oil products," he added.

The new venture comes less than two years after the two companies pledged to invest $6 billion to boost domestic gas production.

"The Indian fuels market is strategic to both companies. India will be the fastest growing refined fuels market over the next 20 years and could also benefit from expansion of convenience non-fuel retailing," Bernstein Research said in a note. "With BP's expertise in fuel marketing and Reliance's Indian retail knowledge, the JV should be highly competitive within the Indian market."

The companies said on Tuesday that BP would expand its current partnership with Reliance to include retail fuel, convenience retailing and aviation fuels in India.

Under the deal, the partners have agreed to set up a new joint venture company -- 51% held by Reliance and 49% by BP -- which will assume ownership of Reliance's existing Indian fuel retail network and have access to its aviation fuel business.

The venture will include Reliance's existing fuel retailing network of over 1,400 sites across India, which the partners plan to increase to up to 5,500 sites over the next five years. Reliance's aviation fuels business currently operates at over 30 airports across India.

Analysts said that together, BP and Reliance would be able to compete better in a market dominated by state-run refiners.

"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," BP CEO Bob Dudley said in a statement.

The venture will seek to expand its reach in the Indian retail fuel market -- broadening access through mobile fuelling units and providing packaged fuels to customers, including home-delivery, the two companies said.

35th Annual Asia Pacific Petroleum Conference (APPEC 2019) | September 9-11, 2019 | Singapore

Gain new connections, new ideas, and new business relationships over 3 days of sessions and networking at the 35th Annual Asia Pacific Petroleum Conference (APPEC 2019).

LEARN MORE

GROWTH STORY

Platts Analytics expects India's oil products demand to stay robust with growth estimated at an average of more than 200,000 b/d over 2021-2025, supported by population growth and increases in disposable personal incomes, as the economy continues to expand.

The Indian government in 2016 granted BP a license to set up 3,500 fuel stations in India, but the company has yet to move ahead with these plans.

Instead, in June 2017, Reliance and BP said they would jointly invest up to $6 billion to develop already-discovered deepwater gas fields off the east coast of India, which would help to boost gas output by 30 million-35 million cu m/d (1 Bcf/d) in phases over 2020-2022.

India has close to 60,000 retail fuel outlets spread across the country, out of which the three state-run firms -- Indian Oil Corp., Hindustan Petroleum Corp. and Bharat Petroleum Corp. -- account for more than 90% of the market share.

The new venture is expected to benefit from access to fuels supplies from Reliance's 1.2 million b/d Jamnagar facility in Gujarat on the west coast of India, the world's largest refinery complex, the two companies said.

Talks for Saudi Aramco to buy a stake in the downstream segment of India's Reliance Industries have been going on for some time. A potential tie-up, if it goes ahead, could open a window of opportunity for both companies to nurture their refining and petrochemical expansion dreams.

However, with this latest tie up with BP, analysts are toning down their expectations.

"Given that Jamnagar will provide the key source of fuels for the JV, we believe that a sell down of a share in the refinery to Aramco is less likely," Bernstein said.

In addition to talks with Reliance, Saudi Aramco has already committed to taking a stake in India's biggest planned downstream project, which is being built by state-run refiners Indian Oil Corp., Hindustan Petroleum Corp. and Bharat Petroleum Corp. Apart from Aramco, Abu Dhabi National Oil Co. has also signed an initial agreement to take a stake in that project.

-- Sambit Mohanty, newsdesk@spglobal.com

-- Edited by Norazlina Jumaat, norazlina.jumaat@spglobal.com