December 01, 2020

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India’s Reliance Industries is now world’s second largest energy company

India’s Reliance Industries is now world’s second largest energy company
Photo courtesy of Reliance Industries

India’s Reliance Industries Limited (RIL), has surpassed ExxonMobil to become the world’s second largest energy company, after Saudi Aramco, with a market value of USD189 billion.

Just this month, RIL, which is controlled by Asia’s richest man and the seventh richest in the world, Mukesh Ambani, closed four deals – including with BP, Google, Qualcomm, and Intel. BP paid USD1 billion for a 49% stake in their Indian fuels and mobility joint venture with RIL called Reliance BP Mobility Limited (RBPML), while Google invested INR33,737 crores (USD337 million) for a 7.73% equity stake in Jio Platforms Limited, a majority-owned subsidiary of of RIL. Meanwhile, Intel capital is investing INR1,894.50 crores (USD24 million) for a 0.39% stake in Jio Platforms, while Qualcomm Ventures, the investment arm of Qualcomm Inc., has committed INR730 crores (USD1.3 million) for a 0.15% stake.

In June, RIL announced that it has raised INR168,818 crores (USD319 million) from leading global investors, including Facebook, in just 58 days, to fulfil Chairman Ambani’s promise to make RIL net debt-free.

Meanwhile, Ambani is working to complete a USD15-billion deal with Saudi Aramco, which was announced to be completed by March 2020, but has now been delayed. RIL has not yet given a fresh timeline for the completion of the deal.

Ambani stated in RIL’s 2019-2020 annual report that “Reliance is working to complete the contours of a defining strategic partnership with Saudi Aramco (Aramco). The partnership gives our refineries access to a wide portfolio of value-accretive crude grades and enhanced feedstock security for a higher oils-to-chemicals conversion.”

At the same time, both Saudi Aramco and ExxonMobil, as well as one private Indian company are rumored to be planning to participate in the bidding process for state-owned Bharat Petroleum Corp. (BPCL). Media reports say  Russia’s Rosneft and Abu Dhabi National Oil Co (ADNOC) may also participate in the bidding process.

The Government of India has proposed strategic disinvestment of its entire shareholding in BPCL comprising 1,149 million equity shares, which constitutes 52.98% of BPCL’s equity share capital along with transfer of management control to a strategic buyer. The transaction excludes BPCL’s equity shareholding of 61.65% in Numaligarh Refinery Limited (NRL), which  would be transferred to an Oil & Gas CPSE.

The deadline for submitting Expressions of Interest (EoIs) has been postponed twice and the current deadline ends on July 31, though it has been widely reported that the Indian government is planning to extend the deadline for a third time.

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