BP piggybacks RIL to enter India’s petro retail market

NEW DELHI: Mukesh Ambani-led Reliance Industries and

British energy

major BP Plc on Tuesday announced a joint venture to open 5,500 petrol stations and sell

jet fuel

in India, expanding their existing relationship in the oil and gas sector for a piece of the action in the world’s fastest-growing energy markets.


The move is expected to introduce real competition in the fuel retail market, dominated by state-run behemoths, and give consumers a taste of new-age service standards, including home delivery of petrol and diesel.

The RIL-BP venture will add about 1,000 petrol stations in five years, building upon RIL’s current presence in the market with 1,400 outlets. The JV is expected to focus on the highways, where the real money lies in diesel sales to the transport sector.

But RIL-BP’s entry will also raise fears of overkill in the market as state-run fuel retailers, who together have some 50,000 petrol pumps, are currently in the process of expanding their network and recently issued LoIs (letters of intent) for more than 9,000 outlets. Private retailers, including RIL, currently have 6,802 outlets.

On the positive side, the entry of a major global player has the potential to change the contours of the fuel retail market in India and turn it into a purely private enterprise-led domain such as the UK and the US where big retail chains rule the roost and discounts are common. A committee under Kirit Parikh had recently made suggestions broadly on such lines.

RIL will be the majority partner with 51% and BP will hold 49% and will take over the ownership of RIL’s motor and jet fuel retail networks, including at 30 airports. BP’s

Castrol

lubricants, mostly sold through neighbourhood motor spares shops, will also be available across the venture’s network. “It is anticipated that final agreements will be reached during 2019 and, subject to regulatory and other customary approvals, the transaction will be complete in the first half of 2020,” RIL said in a statement.

BP established a relationship with RIL by buying stake in the latter’s exploration blocks, including the KGD6 block off the Andhra cost. In 2017, they expanded the relationship to jointly pursue opportunities in new-age mobility solutions and differentiated fuels.

India is expected to be the fastest-growing fuels market in the world over the next 20 years, with the number of passenger cars in the country estimated to grow almost sixfold over the period.

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