The Telegraph
Since 1st March, 1999
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Reliance chases Chevron

Mumbai, March 29: Is Chevron Corporation, the fifth largest integrated energy company in the world, picking up a strategic stake in Reliance Petroleum Ltd (RPL) or joining hands with Mukesh D Ambani in exploration and refining'

Talks of a tieup between the two oil giants swirled on Wednesday after Ambani had a pow-wow with Chevron's top brass in the US.

While Ambani is understood to have met Chevron chairman and chief executive David 'Reilly in the US on Tuesday, the rendezvous between the duo was enough to trigger speculation that the two companies were on the verge of sealing an agreement.

As India does not figure in Chevronís global map at present, the buzz is that it wants to make an entry into the countryís exploration and refining segment. The talk is that Chevron may source petroleum products from the RPL refinery and that it could also supply crude.

ďWhen anybody puts up a refinery, the critical question is of crude oil availability. Chevron, being an exploration company, could supply this basic ingredient to RPL's proposed refinery in return for which it may pick up a strategic stake,Ē an analyst remarked.

Nothing is confirmed, but this bit of news is triggering interest in the RPL issue that is due to hit the market in mid-April.

Observers say Ambani may also be interested in sourcing technology from Chevron as it develops its gasfield in the Krishna Godavri basin.

An RIL spokesperson refrained from making any comment on Ambaniís visit to the US or the possibility of both companies joining hands.

Incidentally, RPL made a presentation to analysts recently where it talked about the likelihood of roping in a strategic investor which could have interests in exploration and refining.

RPL's 29-million-tonne (mt)-per-annum refinery, located in Jamnagar special economic zone, is being set up for exports and the company is eyeing the multi-billion-dollar high octane gasoline market in the US. The plan is to convert the bulk of gasoline from the SEZ refinery into high-octane gasoline and export it to the US.

Petrol and diesel will make up for 80 per cent of RPLís products.

The project cost of the new unit, located at a site adjacent to RILís existing 33 mt refinery, is estimated at Rs 27,000 crore. This is proposed to be funded through debt of Rs 15,750 crore and equity of Rs 11,250 crore, including proceeds from the IPO.

In its draft prospectus filed with market regulator Sebi, RPL said the company would issue close to 180 crore shares of which the promotersí contribution will be 90 crore shares.

The remaining 90 crore shares will be issued to the public. Any additional equity raised in excess of Rs 11,250 crore will be used as additional contingency.

With the commissioning of this unit in August 2008, Reliance will have a refining capacity of 62 million tonnes in Jamnagar, 28 per cent larger than Petroleos de Venezuela SA's Paraguana refinery, the world's biggest as of today.

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