Subsidiaries to sell petro-products abroad.
Reliance Industries (RIL), the country’s largest company by market capitalisation, has set up two wholly-owned subsidiaries in London and Singapore, which will trade in petroleum products produced by the company’s refineries in India, the company said in a press statement.
With subsidiaries in the oil trading hubs of London and Singapore, which also have oil exchanges, Reliance will be able to directly sell its products to international consumers.
The company till recently depended on independent traders for selling products from its 660,000 barrels-per-day (bpd) refinery at Jamnagar in Gujarat to overseas buyers. The company then set up a trading division which helped it negotiate directly with buyers of its petroleum products.
The financial gain that Reliance will get from this structure was not disclosed by the company. At present, the company sells directly to traders, who in turn route it to consumers; and also through trading divisions.
Both the subsidiaries will be headed by former Shell executives. The London-based Reliance Global Energy Services will be led by Peter Ward, the former president of Shell Trading’s gas and power division. Reliance Global Energy Services Singapore Pte will be headed by Michael Ng, who has been the head of Shell’s international aviation business in Asia.
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Reliance exports over 80 per cent of the products its produces from the 660,000 bpd export-oriented refinery at Jamnagar. The company’s subsidiary, Reliance Petroleum, is also expected to commission its 580,000 bpd refinery adjacent to the existing one. This refinery, likely to be put on stream later this year, is located in a special economic zone (SEZ) and all the products may be exported.
Reliance buys high sulphur crude oil, which are cheaper than low-sulphur crude oil, from various parts of the world and processes it in its highly complex refineries into the highest quality petrol and diesel, which is exported to countries in Europe and North America.
The two new trading arms may also help Reliance source cheap grade crude oil for its refineries, a Mumbai-based analyst said.