Reliance Industries and UK's BP plc have agreed to form a new joint venture to set up petrol pumps and retail aviation turbine fuel to airlines in India, the two companies said on Tuesday.
Reliance's existing 1,400-odd petrol pumps, as well as 31 aviation fuel stations, will be transferred to the new joint venture where BP will hold 49 per cent equity stake. Reliance will hold the balance 51 per cent in the entity, which aims to expand the retail network to 5,500 petrol pumps in the next five years, the two firms said in a joint statement.
It, however, did not say if BP will pay Reliance any money for getting near half ownership of the 1,400-odd petrol pumps and jet fuel retailing facilities at 30 airports.
The two firms signed heads of agreement on Tuesday and hope to finalise a sales purchase agreement, which will entail investments, in next few months, an official said.
The agreement with BP comes amidst talks Reliance is holding with Saudi Aramco for a possible sale of a stake in the twin oil refineries at Jamnagar in Gujarat. Saudi Aramco, which is said to be keen to buy a quarter of 68.2 million tonnes refineries of Reliance, is also looking to venture into fuel retailing in India to tap the world's fastest-growing energy consumer.
This is the third joint venture between Reliance and BP since 2011.
BP had in 2011 bought 30 per cent stake in 21 oil and gas exploration and production blocks of Reliance for USD 7.2 billion. At that time, another 50:50 joint venture, India Gas Solutions Pvt Ltd, was set up for sourcing and marketing gas in India.
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While Reliance-BP has relinquished all but a couple of oil and gas blocks over these years, IGSPL is at a nascent stage.
BP and Reliance in the statement said: "They have agreed to form a new joint venture that will include a retail service station network and aviation fuels business across India".
"Building on Reliance's existing Indian fuel retailing network and an aviation fuel business, the partners expect the venture to expand rapidly to help meet the country's fast-growing demand for energy and mobility," it said.
The country currently has nearly 65,000 petrol pumps, with public sector retailers owning 58,174. PSU retailers have plans to double this network and have already starting appointing dealers.
Russia's Rosneft-backed Nayara Energy, formerly Essar Oil, has 5,244 petrol pumps and has plans to scale them up to more than 7,000 in 2-3 years.
Royal Dutch Shell Plc has 151 outlets and is slated to add 150-200 more petrol pumps.
BP had in 2016 received a license from the government to set up 3,500 petrol pumps in India.
"This is a further development of Reliance and BP's longstanding partnership, which began in 2011 and expanded in 2017 including an agreement to seek options to work together to develop differentiated fuels and mobility businesses," it said.
India is expected to be the fastest-growing fuel market in the world over the next 20 years, with the number of passenger cars in the country estimated to grow almost six-fold over the period.
"Reliance and BP's venture will incorporate and build on Reliance's current fuel retailing network of over 1,400 sites across India, which the partners aim to grow rapidly to up to 5,500 sites over the next five years," it said. "This joint venture will also include Reliance's aviation fuels business, which currently operates at over 30 airports across India, providing participation in this rapidly-growing market."
"The new venture will seek to offer Indian consumers high-quality differentiated fuels and services at its network of sites, benefitting from Reliance's extensive retail business experience and market-leading access and digital connection to consumers through its Jio digital platform," the statement said. "BP will bring its international experience in convenience and fuel retailing and aviation operations. Castrol lubricants will also be available across the venture's network."