2/6/2020 Reliance Industries' deal with Aramco: Mukesh Ambani wants chemicals to dominate Jamnagar refinery output

eliance Industries' deal with Aramco:

Mukesh Ambani wants chemicals to
dominate Jamnagar refinery output
RIL wants to convert 70 per cent of its output from Jamnagar refinery and petrochemical complex
to chemicals. At present, the complex produces 90 per cent fuels - primarily petrol, diesel, naphtha,
kerosene and Liquefied Petroleum Gas (LPG) - and the rest 10 per cent chemicals
Nevin John New Delhi Last Updated: November 12, 2019 | 18:54 IST

In the last annual general meeting (AGM) of RIL, Ambani announced the deal with Saudi Aramco to sell strategic
stake in the business

MORE FROM THE

AUTHOR
Budget 2020: Failed
disinvestment plans,
lesser tax collection
affected fiscal deficit
Reliance Industries (RIL), India's most profitable company,
has prepared a blueprint for its oil-to-chemical (O2C) play as it
advances the negotiations with strategic investor Saudi Aramco
to sell strategic stake in the business. According to the plan,
RIL wants to convert 70 per cent of its output from Jamnagar
refinery and petrochemical complex to chemicals. At present,
the complex produces 90 per cent fuels - primarily petrol,
diesel, naphtha, kerosene and Liquefied Petroleum Gas (LPG) -
and the rest 10 per cent chemicals.

"The ultimate goal is to achieve over 70 per cent conversion of

the crude, which is refined in RIL's twin refineries in
https://www.businesstoday.in/current/corporate/reliance-industries-deal-aramco-mukesh-ambani-chemicals-jamnagar-refinery-output/story/39001… 1/3
2/6/2020 Reliance Industries' deal with Aramco: Mukesh Ambani wants chemicals to dominate Jamnagar refinery output

Jamnagar, to high-margin chemical building blocks of olefins

and aromatics," said company sources. The present
petrochemicals production includes polymers, polyesters, fiber
intermediates, aromatics, elastomers and composites solutions.
Budget 2020: Why infra
companies' share "Saudi Aramco is keen on the concept of billionaire
prices fell despite Rs Mukesh Ambani and that is why it expressed its desire to
100 lakh crore
investment become strategic partner in the business," said sources. The
announcement Saudi government-owned company, which is going for the
world's largest initial public offering, plans to pick up 20 per
cent stake in RIL's O2C business - which includes material
assets such as two refineries and a petrochemicals complex in
Jamnagar, Gujarat, besides stake in fuel retailing - for Rs 1.1
lakh crore.

Also Read: Saudi Aramco IPO brings cheer to Indian market!

Here's why

In the last annual general meeting (AGM) of RIL, Ambani

announced the deal with Aramco. "As the world migrates from
fossil fuels to renewable energy, we will further maximise O2C
conversion and upgrade our fuels to high value petrochemicals.
This upgradation will be implemented in a phased manner over
the next decade to meet the rapidly increasing demand for
petrochemicals, in India and the region," Ambani vaguely
mentioned about the O2C plan in the annual report.

The fundamentals of the O2C strategy are to employ advanced

molecule management to upgrade the refinery intermediate
streams by value, said company officials. "Furthermore, RIL
has developed a disruptive innovative technology, a
Multizone Catalytic Cracking (MCC) process, which converts a
wide range of feedstock to high value propylene and ethylene in
a single riser," they said.

Also Read: Why are kirana stores hesitant to partner with

Reliance, Amazon and Flipkart?

https://www.businesstoday.in/current/corporate/reliance-industries-deal-aramco-mukesh-ambani-chemicals-jamnagar-refinery-output/story/39001… 2/3
2/6/2020 Reliance Industries' deal with Aramco: Mukesh Ambani wants chemicals to dominate Jamnagar refinery output

RIL's Jamnagar complex is in the global limelight, as it has

commissioned the world's first fully integrated Refinery Off
Gas Cracker (ROGC) and petcoke gasifiers, besides the existing
twin refineries, which is the world's largest single location
refining facility. The Jamnagar site has complexity index of
21.1, one of the highest in the world.
According to the deal, Aramco will supply 500,000 barrels of
crude oil every day to RIL's Jamnagar refinery (28 per cent of
their requirement) on a long-term basis. "Aramco will be able
to add substantial value through the feedstock that they supply
to RIL," said the company sources. Ambani focusses on
sustainability and circular economy concepts to convert RIL's
O2C business as one of the top five petrochemicals companies
in the world.

RIL's hydrocarbon business faced challenges because of weak

global trade since 2018-end. Volatility in global feedstock
prices, muted demand and incremental supply from new
capacities led to the challenging environment. The refining
business also witnessed uncertainty in oil supply due to
heightened geopolitical tensions in the Middle East, sanctions
on Iran, sharp production decline in Venezuela and armed
conflict in Libya.

The production of high-value light distillate cracks was lower

due to moderation in the petrol demand across key markets.
RIL's gross refining margin fell for the seven consecutive
quarters until June 2019, before recovering in the second
quarter. The Jamnagar refineries are capable of producing
Euro VI fuel.

https://www.businesstoday.in/current/corporate/reliance-industries-deal-aramco-mukesh-ambani-chemicals-jamnagar-refinery-output/story/39001… 3/3