Reliance, oil PSUs end supply deal

Reliance Industries is not seeking to extend its long-term marketing contract with the public sector oil retailers, Indian Oil, Hindustan Petroleum and Bharat Petroleum, beyond March 31.

Reliance is now planning to sell output from its 33 million tonne Jamnagar refinery in the spot market to bulk Indian consumers, including any of the state-owned oil retailers, till its retail network is up and running. Spot deals are contracts of less than a year.

Although Reliance exports at least 25 per cent of its output, company chairman Mukesh Ambani said the focus would now be on the domestic market.

Speaking on the sidelines of a conference to announce a partnership with LG Electronics, Ambani said: "There is no proposal to extend the contract with the oil PSUs. We are looking at the spot market and may enter into spot deals for whatever we produce, but no long-term contracts."

Ambani said Reliance would set up 300-500 retail outlets to have a network of 1,500 petrol pumps in place by March 2005. The company will also set up seven marketing depots across the country to foray into the wholesale market.

The government has allowed private players to enter the country's 110 million tonne market for transportation fuels, the domain of state-owned Indian Oil, Hindustan Petroleum, Bharat Petroleum and IBP for long.

Reliance has received approval to set up 5,849 petrol pumps. So far it has opened three. Though Reliance's agreement to market transportation fuels through the three state-owned oil retailers expires on March 31, it can market some of its products through Indian Oil's network as per a second agreement that expires in 2008-09.

Besides Reliance, Essar Oil and Royal Dutch/Shell are setting up petrol pumps across the country. Essar has set up nine stations. The state-owned Oil and Natural Gas Corporation and its subsidiary Mangalore Refinery and Petrochemicals will set up 1,100 retail outlets. Numaligarh Refinery has also received clearance to set up 300 outlets.