vengabeats
Nilesh Nagdev
The $193-billion Chevron bought a 5 per cent stake in Mukesh Ambani's Reliance Petroleum (RPL) for $300 million (about Rs 1,357 crore), or about Rs 60 per share. This would be the first FDI in India's refining sector in 30 years. RPL is setting up an export-oriented refinery in Jamnagar, Gujarat. According to the MoU signed with RPL's parent Reliance Industries, Chevron has the right to increase its stake to 29 per cent, which would be worth around $2 billion if the option is exercised.
Under this deal, in addition to refining, RPL and Chevron can collaborate on exploration and production, marketing and retail, and sourcing of crude. In a statement, Jeet Bindra, president, Chevron Global Refining, said: "This new plant at Jamnagar will increase our ability to process a variety of hard-to-refine crudes. We intend to use our worldwide trading capability to source crude and place refined products for the new refinery."
Analysts have been saying that RPL needed a global partner in the high-margin exploration and production business to get world-class technology. For Chevron, the deal is an entry into the high-potential Indian market that ensures new supply sources for its global network.
The Chevron deal was announced a day before the opening of the RPL IPO of 450 million shares in the Rs 57-62 band. After the 5 per cent sale to Chevron, the Mukesh Ambani group will have a 75 per cent stake in RPL.
Under this deal, in addition to refining, RPL and Chevron can collaborate on exploration and production, marketing and retail, and sourcing of crude. In a statement, Jeet Bindra, president, Chevron Global Refining, said: "This new plant at Jamnagar will increase our ability to process a variety of hard-to-refine crudes. We intend to use our worldwide trading capability to source crude and place refined products for the new refinery."
Analysts have been saying that RPL needed a global partner in the high-margin exploration and production business to get world-class technology. For Chevron, the deal is an entry into the high-potential Indian market that ensures new supply sources for its global network.
The Chevron deal was announced a day before the opening of the RPL IPO of 450 million shares in the Rs 57-62 band. After the 5 per cent sale to Chevron, the Mukesh Ambani group will have a 75 per cent stake in RPL.