After an almost six years hiatus from the oil and gas business when Mukesh Ambani wants to talk about it, it is bound to create a buzz. This is what happened Wednesday night around 8:45 pm, when an invite came stating that Mukesh Ambani, Chairman and Managing Director, Reliance Industries, and Bob Dudley, Group Chief Executive, BP p.l.c, will hold a media interaction on Thursday.
Left to the imagination of the reporters was the reason for the press conference. The speculation varied from “Is Ambani exiting the exploration business given the bitter experience he has had with his east coast gas producing block – KG D6? ”, or “Are Ambani and Dudley going to announce further investments? If yes, is it LNG business or is BP joining RIL in its petroleum retail business?”
While Ambani and Dudley met Minister of State (Independent Charge) for Petroleum & Natural Gas Dharmendra Pradhra during the day all one got to hear from different quarters “it is further expansion of ties between the two entities.”
And from Ambani himself “
After his meeting with Ambani and Dudley, Pradhan tweeted: "BP&RIL have invested in KG Basin. Invited them to invest in retail as well".
It will not be a surprise if Ambani, who already has a relationship with BP since 2011, partners with BP for its petroleum retail business. Due to the distorted price regime of petroleum products the private sector retailers such as Reliance Industries and Essar for years had taken a hit on their business.
However, in past few years with the government deregulating the auto fuel pricing – petrol and diesel – the private players have been seeing a revival. Though not all have been able to sustain due to various reasons, Essar is already on its way to exiting the downstream business.
In fact, an indication of what Ambani, who has a track record of operating the world's best refineries, has in mind about oil and gas business came from what he had told his shareholders at one of the recent annual general meetings. Ambani had said: “We divested our midstream interest for over $1 billion in the past year and will look for further monetisation opportunities.”
“Our petroleum retailing business is now a part of overall retailing as also a very large distribution network for mobile and digital services…We are also retailing fuel from over 1,000 outlets in India. In India, we sell to other oil companies, transport undertakings and airlines. Our Aviation Fuel stations are present at 25 airports across India and these fuel an aircraft every 4.25 minutes on an average,” he had said.
LNG imports also cannot be ruled out, as both already have 50:50 joint venture for sourcing, distributing and marketing gas in India.
As regards partnership with BP, Ambani had said, “We are proud of our partnership with BP in the domestic portfolio…We are making our best efforts to sustain production from this complex deep water basin. We are also evaluating, along with our partner BP, development plans to monetise the remaining resources of 4-5 TCF from this block, in the framework of the new gas pricing policy.”