Strategy of Reliance Petroleum

Reliance has an excellent well thought out strategy in place. One of the greatest asses of RIL
comes from its greatest investments, that is the investment it has made in building the worlds
refinery in Jamnagar Gujarat. With a capacity for refining 1.24 million barrels of crude oil
per day making it the largest refinery in a single location in the world thus giving Reliance a
capital Cost competitive advantage.

Exploration Production Transportation

Marketing Refining

Reliance petroleum has a very strongly linked value chain, ranging from using cutting edge
technologies for exploration- as proven by the search of site D-6 in Krishna-Godavari basin
where Reliance discovered the largest natural gas reserve in India. The production,
transportation is easily handled by Reliance. Then comes the Refining and Marketing where
reliance’s good relations with the government and its strategic alliances have really helped
out. By 2008 Reliance had only been given approval for the distribution of petroleum through
1200 outlets but soon an approval for operating and owning 5800 was also approved by the
government. Chevron the US based petroleum giant has around 5% stake in Reliance
petroleum with an option to increase the stake to 29%. Reliance has operated well even
before Chevron came into the picture, but what Chevron brings into the table is the ease of
access to global supply chains and access to newer technologies. As of December 2019,
Reliance is set to enter into a massive deal of $15 billion with Aramco in this deal its worth
mentioning that Aramco is overpaying by 20% and RIL which sources its one-quarter of
crude which is about 350,000 barrels per day from Saudi Arabi, UAE the Aramco will alone
provide 500,000 barrels giving a major boost to Reliance. BP and Reliance inked a major
deal where in both the companies announced a partnership across the complete value chain
spectrum there in a 50:50 joint venture between the two companies would be formed for the
sourcing and marketing of natural gas in the country. The Joint venture will work in advanced
avenues to increase the receiving, transportation and marketing of ga in India. BP brings to
the table a world class knowledge in deep water explorations and this partnership will give
reliance tremendous advantage in further exploiting the deep-water natural gas exploration.
BP’s confidence in Reliance was evident with them investing $7.2 billion which was at that
time(2011) one of the largest Foreign direct investments made. Not only this Reliance as of
2019 again decided to enter into a sweet multi billion deal where in it would tie-up with BP
for opening and operating 5500 new sites of retail sites. This signifies that Reliance has a
deep-rooted culture of establishing long lasting partnerships which again is a part of its
corporate strategy which give benefits in the sense that it gives access to newer technology
and better reach.

In contrast to the other Indian Companies like Essar oil, Reliance has been very fluid at
changing their competitive positioning from time to time. Presently Reliance is bracing itself
for the mega Electric Vehicle boom that is expected to happen in India. The strategy has been
quietly shifting from oil-to-chemical slowly and as a part of this plan Reliance has decided to
only produce Aviation fuel and petrochemicals in its mega Jamnagar factory. Reliance which
exports most of the refined crude will be working towards building a strong inclination
towards petrochemicals used to make plastics etc so as to insulate itself from the advent of
EV.