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RIL — Fossils Economy Foray

RIL — Fossils Economy Foray

Existing Fuel Lines ( Refined Fossil Fuels/LNG/CNG/LPG/Aviation Fuel) :

Existing Fuels Lines Ugrade

  • Next generation dispensing systems with modern IIOT tech being installed.
  • Other services being provided are Round-the-clock product availability, Trained, well groomed and courteous pump attendants, Assured quality and quantity, State of the art technology, Minimum wait time due to high-speed dispensers, A wide range of payment options, Quick electronic billing for every transaction, Free drinking water, Free air service, Clean toilets, Comprehensive oversight mechanism.

Aviation Fuel

  • RIL plans to increase its network of aviation fuel stations by 50 per cent as it looks to capture greater market share in the business currently controlled by public sector oil retailing firms.
  • India continues to be one of the fastest growing aviation markets in the world for the fifth consecutive year.
  • RIL, plans to capture this opportunity through increased presence at airports to refuel airplanes.
  • Air-passenger traffic in India rose 9 per cent even in February after the Indian carriers recouped to full capacity that was lowered following the closure of a major domestic carrier in the first few months of financial year 2019–20 (April 2019 to March 2020) as well as disruptions at Mumbai airport owing to construction and maintenance
  • Following the COVID-19 pandemic, while travel restrictions were being imposed elsewhere, India was largely unaffected till the end of March 2020, before the sharp escalation in travel bans globally and lockdowns impacted India’s aviation sector too.
  • Reliance Aviation has the highest market share in 20 per cent of the operating airports.
  • RIL is looking to increase its network to 45 locations as against 30 at the end of FY 2019–20 and is well geared to benefit with the growth in the Indian aviation market.
  • India currently has 256 aviation fuel stations, with state-owned Indian Oil Corp owning 119 of them. Bharat Petroleum Corp Ltd (BPCL) has 61 and Hindustan Petroleum Corp Ltd (HPCL) the remaining 44.
  • RIL is the largest private aviation fuel retailer with 31 stations.

JIO BP — RBML (Reliance BP Mobility Limited)

A New Journey Begins…

  • Some journeys are destined to be iconic. Especially ones that feature two powerful industry icons. In August 2019, Reliance Industries Limited (RIL) & bp, two powerful industry icons with a history of milestones to their name, came together to sign a historic agreement.
  • The collaboration would be the coming together of Reliance’s extensive access and connect with the Indian consumers on the combined strength of group companies and bp’s enriched experience in fuel retailing around the world.
  • The partnership will offer Indian consumers a full slate of additivated regular and premium quality fuels with market-leading consumer benefits alongside an all-new redefined spectrum of ancillary convenience services.

Your Journeys — Revolutionized

  • With aspirations to shift the paradigm in Indian fuel retailing industry, RBML puts consumers firmly at the center of its universe. Innovative products, improved services, and cutting-edge solutions will help us set an altogether-new benchmark in mobility solutions
  • Our vision of being the ‘Solutions Provider Of Choice’ in Mobility Solutions in India, is fueled by the deep rooted and proven strategic relationship between RIL and bp over the years.
  • This coming-together is building on our promise to Indian consumers that they can look forward to new standards, differentiated offerings, and innovative products and services. One other market-leading bp brand, Castrol Lubricants, will also be joining in and will be available across the venture’s network. Truly, Indian consumers’ journeys will never be the same again.

Time To Shift Gears

  • India will be amongst the fastest-growing fuels market in the world, over the next 20 years. And what better way to meet the much-awaited consumer demand for global fuel quality and solutions than by scaling up?
  • RBML will bring together our combined knowledge, expertise and experience to provide high-quality fuels and services, and will expand RIL’s portfolio of over 1400 existing retail sites to 5,500. RBML will also include RIL’s aviation fuels business, currently operating at over 30 airports across India, in order to tap the potential of this rapidly growing market.
  • So, whatever be your journey, or to wherever, you know who’s fueling it.

To be a part of RBML’s journey of excellence, growth & Profit, keep watching this space…

  • RIL and BP announced their partnership of fuel retailing in India on August 6th. This joint venture planned to install 5,500 fuel retail outlets across India. The joint ventured is owned 51% by Reliance and 49% by BP.
  • There is close to 100 trillion cubic feet of yet-to-be-found natural gas reserves in India that would be enough to meet half of the nation’s gas demand till 2050.
  • India will see a massive investment of $118 billion in oil and gas exploration as well as in setting up of natural gas infrastructure in the next few years as the country prepares to meet the needs of a fast growing economy.
  • Amid reports of ONGC’s inability to derive any benefit out of its HPCL acquisition, the state-owned firm was free to sell its stake in the oil refining and marketing company.
  • No single form of energy can meet the growing energy demand in India given India’s development imperative that aims to ensure energy justice to all. Mixing all commercially viable energy sources is the only feasible way forward in our context. India will chart its own course of energy transition in a responsible manner.
  • India, the biggest emitter of greenhouse gases after the US and China, has been pushing for a gas-based economy and plans to connect 10 million households to piped natural gas by 2020. India plans to reduce its carbon emissions by 33–35% from its 2005 levels by 2030, as part of its commitments to the United Nations Framework Convention on Climate Change adopted by 195 countries in Paris in 2015.
  • BP in partnership with Reliance Industries is investing about $5 billion to bring about 1 billion cubic feet a day of new domestic gas onstream beginning mid-2020. JIO BP intends to sell gas in an open market to their customers as well as our own companies as well.
  • JIO BP is very optimistic about the joint venture as it will bring all types of new things, electrification, mobility, bringing convenience marketing together with Reliance.
  • The unfolding events in West Asia have raised the spectre of a spike in transportation fuel prices in India, with traders worldwide speculating if oil will cross the $100-mark yet again. Any sudden increase in global prices will affect India’s oil import bill and its trade deficit. Every dollar increase in the price of oil raises India’s import bill by ₹10,700 crore on an annualised basis. India spent $111.9 billion on crude oil imports of 207.3 million tonnes in 2018–19.
  • Areas which are very critical for the flow of crude oil are coming under heavy insecurities… Earlier cycles have also seen oil related speculative tendencies. But I am sure today in a world where not just oil, not just crude but there are so many others sources of energy which many countries are driving to get on to their basket. The challenge is in widening this basket and also challenges for countries like India where we still have a very big gap between energy consumption and what it is got to be ideally. We would like to move forward towards better energy security for the country and also from a varied wide basket,” Finance Minister Nirmala Sitharaman said.
  • The cost of the Indian basket of crude, which averaged $47.56 and $56.43 a barrel in FY17 and FY18, respectively, was at $59.35 in August, according to data from the Petroleum Planning and Analysis Cell. The average price jumped to $60.89 a barrel on 11 October. The Indian basket of crude represents the average of Oman, Dubai and Brent Crude.
  • Reliance Industries Limited (RIL) has announced a joint venture with BP, one of the largest international energy companies in India, called the Reliance BP Mobility Limited (RBML). The joint venture will begin selling fuels and Castrol lubricants with immediate effect from its existing retail outlets, which will be rebranded to Jio-bp. Further, the new joint venture aspires to provide Indian consumers with advanced fuels with lower emissions, electric vehicle charging and other low carbon solutions over time, stated the official communication.
  • Following initial agreements in 2019, bp has paid RIL $1 billion for a 49 percent stake in the joint venture, with RIL holding 51 percent. Operating under the Jio-bp brand, the joint venture aims to become a leading player in India’s fuels and mobility markets. It will leverage Reliance’s presence across 21 states and its millions of consumers through the Jio digital platform. bp will bring its extensive global experience in high quality differentiated fuels, lubricants, retail and advanced low carbon mobility solutions.
  • 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 six-fold over the period. RBML aims to expand from its current fuel retailing network of over 1,400 retail sites to up to 5,500 over the next five years. This rapid growth will require a four-fold increase in staff employed in service stations growing from 20,000 to 80,000 in this period. The joint venture also aims to increase its presence from 30 to 45 airports in the coming years, mentioned the official release.
  • Reliance is expanding on its strong and valued partnership with bp, to establish a pan-Indian presence in retail and aviation fuels. RBML will aim to be a leader in mobility and low carbon solutions, bringing cleaner and affordable options for Indian consumers with digital and technology being the key enablers.
  • India has been leading the way with innovations in digital technology, value engineering and new energy solutions. It is a country that will require more energy for its economic growth and, as it prospers, its needs for mobility and convenience will accelerate. BP has a proud history in India spanning over a century.
  • Reliance BP Mobility Ltd (RBML), a joint venture of Reliance Industries (RIL) and UK’s energy major BP Plc, will set up battery swapping stations at its fuel outlets and spend around ₹3000 crore to expand the fuel retail network.
  • RIL and BP, which set up RBML this month, will operate under the Jio-BP brand. BP will pay ₹7,000 crore to RIL for its 49% stake in the venture.
  • In addition to conventional fuel options, RIL plans to provide a gamut of alternative energy options to its customers. This includes electric vehicles (EV) charging points, battery swapping stations, freight aggregation. RBML plans to expand fuel retail outlets to over 5,500 from the present over-1,400. It also plans to build full-stack electrolyzer and fuel cell solutions in India which will be used to run hydrogen fuel cell vehicles. “We will replace transportation fuels with clean electricity and hydrogen,” RIL chairman Mukesh Ambani had said at the company’s annual general meeting on 15 July.
  • With its eye on building an optimal mix of reliable, clean and affordable energy with hydrogen, wind, solar, fuel cells, and battery, RIL aims to become ‘net carbon-zero’ by 2035.

Reliance Industries and BP scouts for natural gas buyers

  • Reliance Industries and BP are seeking buyers for natural gas from their $5-billion deep sea project in the KG D6 block at a time when rates have crashed due to global supply glut.
  • The global supply glut has sharply cut rates of LNG to below $4 per mmBtu in the spot market.
  • RIL and BP, which are jointly developing three fields named R-Cluster, Satellites and MJ in KG basin, have launched the process to auction 5 million metric standard cubic meters per day of gas from the R-Cluster field that is slated to start production in April-June 2020. This will be the first output from three fields, which are expected to produce 1 billion cubic feet a day when fully developed in 2022.
  • CRISIL Risk and Infrastructure Solutions Ltd will manage the bidding process and evaluate the bids, which must be submitted electronically on October 10.
  • A bidder will have to quote a price (expressed as a percentage of the dated Brent), supply period, and the volume of gas required. Dated Brent means the average of published Brent prices for three calendar months immediately preceding relevant contract month in which gas supplies are made.
  • Bidders can’t quote below 9% of dated Brent price. So, at Thursday’s Brent oil price of $60.71/ barrel, the floor price would be $5.46/m metric British thermal unit (mmBtu). The government set ceiling for gas from difficult fields, currently at $9.32/ mmBtu, would act as the cap.
  • The global supply glut has sharply cut rates of liquefied natural gas (LNG) to below $4 per mmBtu in the spot market.
  • Indian Oil Corp reportedly bought an LNG cargo last month for $3.69 per mmBtu, equal to the domestic formula price for gas from ordinary fields.
  • RIL is also planning CNG (compressed natural gas) for transportation and PNG (piped natural gas) / LPG for house holds.
  • Reliance Industries Ltd (RIL), Essar Oil Ltd, Oil and Natural Gas Corp. Ltd (ONGC) and Torrent Power Ltd are among companies planning to bid for the ninth round of city gas distribution (CGD), two people aware of the matter said.
  • The Petroleum and Natural Gas Regulatory Board (PNGRB) will offer compressed natural gas retailing licences in 100 cities shortly.
  • The PNGRB has so far held eight rounds of bidding. The last few rounds of CGD bidding had seen lukewarm response.
  • This time around, the PNGRB is looking at a new model with a different bidding parameter. Last October, the regulatory body had called for industry comments on an alternative model of bidding criteria for CGD.
  • To encourage wider participation, PNGRB has proposed to increase the exclusivity period and has pruned the minimum net worth criteria for bidders. This will encourage players to bid.
  • Companies with a net worth of not less than Rs150 crore can bid for cities with 5 million people, and those with Rs100 crore net worth can bid for cities with 2–5 million people. A Rs 5 crore net worth company can bid for cities with less than 1 million people.
  • Companies which win CGD licence for a city would have eight years of marketing exclusivity in that city, against the existing five years. Also, entities with experience of at least one year in operation and maintenance of a CGD network and with adequate number of technically qualified personnel would meet the eligibility criteria for bidding.
  • Also, companies securing a CGD licence will have to enter into a firm natural gas supply agreement with a natural gas producer or marketer and have to achieve financial closure within 270 days from the date of grant of licence.
  • The sixth round of bidding for 34 cities in 2015 saw only 20 bids. The seventh round for 11 cities received only one bid. Seven cities were offered in the eighth round last year but not all licences have been awarded so far.
  • PNGRB in its notice dated 16 January 2018 on the draft bidding regulations had invited comments by 2 February after which it will finalise the criteria. Many companies have replied to PNGRB’s notice, which the regulator has uploaded on its website.
  • According to the Petroleum Planning and Analysis Cell, the three OMCs IOCL, BPCL, HPCL together have 25.21 crore active LPG customers in the domestic category served through a network of 22,654 LPG distributors. The LPG coverage of the country is around 90% and OMCs have 191 LPG bottling plants with rated bottling capacity of around 17.6 million tonne per annum.
  • While the petroleum ministry is in favour of allowing the waiver, it is unsure about parallel marketers becoming a part of the subsidised LPG market, said a government official.
  • Allowing private firms to supply subsidised LPG cylinders will build pressure on the government to pay dues on time. However, at present the government manages its finances by not paying the entire due to OMCs. For instance, the government is expected to roll over around Rs 32,000 crore of subsidy amount from 2018–19 to the next fiscal in order to maintain its revised fiscal deficit target at 3.4%.
  • India has become the world’s second-largest LPG consumer. It consumed 24.9 million metric tonnes of LPG in 2018–19, of which nearly half was imported.
  • Reliance serves about a million cooking gas customers across several states, which is tiny compared to country’s customer base of 26.5 million. The country’s cooking gas customer population has exploded in recent years due to the government’s focus on taking cleaner fuel to more homes. About 20 million customers do not receive subsidy — a potentially attractive segment private players can hope to lure with better services.
  • The Terms of Reference of the expert committee on the marketing of liquefied petroleum gas (LPG) include “review the existing structure of LPG marketing in the country and assess whether competition should be allowed in marketing of a controlled commodity which is deficient in the country,” a recent memo by the oil ministry said.
  • The panel will also “assess the need, if any, to liberalise government policies to increase the participation of private sector in LPG marketing in the country ..
  • The panel has the same experts who were in the committee that recently recommended policy reforms regarding the setting up of petrol pumps, one key measure being eliminating the condition of investing ?2,000 crore in the oil sector to obtain fuel retail license.
  • AgenciesIndia has become the world’s second-largest LPG consumer. It consumed 24.9 million metric tonnes of LPG in 2018–19, of which nearly half was imported.
  • The government has set up an expert panel to consider allowing private firms to sell subsidised cooking gas — a long-standing demand for companies like Reliance Indust ..
  • To get a slice of the 20-million-tonne-plus annual sales of packaged domestic liquefied petroleum gas (LPG), parallel marketers, including Reliance Industries (RIL), Nayara Energyand Total, have asked the government to allow them to have a level-playing field with the state-run oil marketing companies (OMCs).
  • The companies recently met petroleum and natural gas ministry officials and demanded that same as OMCs, they should be allowed to sell subsidised LPG cylinders and be part of the subsidy transfer mechanism. This is expected to expand the market opportunity for these firms. They have also demanded waiver of 5% custom duty paid on LPG import which is not applicable on OMCs.
  • At present, only OMCs — Indian Oil, BPCL and HPCL — sell subsidised LPG wherein consumers pay the full price upfront, but eligible beneficiaries subsequently get back the subsidy amount in their bank account. Domestic LPG producers have also been given mandate that total output should be supplied to OMCs. Nevertheless, India’s LPG consumption far exceeds its domestic production, and for FY19, the country imported 52% of its LPG requirement.
  • Some parallel marketers such as RIL (under brand Reliance Gas) and SuperGas sell LPG cylinders but their business size is small given they are not able to cater those customers who are eligible for subsidy i.e. those households having an annual income of less than Rs 10 lakh.
  • RIL through a 2015 order has been allowed to sell 10,000 tonne per month of its own LPG but it needs to ensure that it imports the same amount and supply to OMCs at cost-neutral rate. The Mukesh Ambani-owned company has also demanded that it be allowed to sell its entire LPG output in the domestic market.
  • While RIL did not respond to a query sent by FE, Nayara Energy’s chief executive officer B Anand, in an emailed response, said, “LPG distribution presents an attractive business proposition. If given an opportunity, Nayara Energy would like to participate in marketing of domestic LPG.”
  • According to the Petroleum Planning and Analysis Cell, the three OMCs together have 25.21 crore active LPG customers in the domestic category served through a network of 22,654 LPG distributors. The LPG coverage of the country is around 90% and OMCs have 191 LPG bottling plants with rated bottling capacity of around 17.6 million tonne per annum.
  • While the petroleum ministry is in favour of allowing the waiver, it is unsure about parallel marketers becoming a part of the subsidised LPG market, said a government official.
  • Allowing private firms to supply subsidised LPG cylinders will build pressure on the government to pay dues on time. However, at present the government manages its finances by not paying the entire due to OMCs. For instance, the government is expected to roll over around Rs 32,000 crore of subsidy amount from 2018–19 to the next fiscal in order to maintain its revised fiscal deficit target at 3.4%.

BackGround

  • The country currently has 66,408 petrol pumps, with public sector retailers owning 59,831. PSU retailers have plans to double this network and have already starting appointing dealers.
  • Russia’s Rosneft-backed Nayara Energy, formerly Essar Oil, has 5,453 petrol pumps and has plans to scale them up to more than 7,000 in two-three years.
  • Royal Dutch Shell has 167 outlets and is slated to add 150–200 more petrol pumps.
  • BP had in 2016 received a licence from the government to set up 3,500 petrol pumps in India but it didn’t move on that authorisation.
  • French energy giant Total SA too is keen on entering the Indian retail market and has tied up with Adani Group for the same.
  • The new venture, further development of RIL and BP’s longstanding partnership, will include an India-wide fuels retail service station network and aviation fuel marketing business. Building from RIL’s existing businesses, the partners expect the venture to co-create a world-class fuels partnership to grow rapidly and help meet India’s fast-growing demands for energy and mobility,” the statement issued on Monday said.
  • The partnership, it said, will expand the fuel and ATF network to up to 5,500 petrol pumps and 45 aviation fuel stations over the next five years.
  • Reliance’s digital capabilities, technical expertise and reach complement our international fuels and service offers. Today’s announcement is another milestone in our common goal to serve the Indian consumer. This new venture is a unique opportunity to build a leading, fast-growing business that can help meet India’s demands and create exciting new digital and low-carbon options for the future.”
  • What is it like asking to be born at a time when the world around is preparing to write your death certificate? Ask 78,500 petrol pumps the state oil firms are aiming to set up while the mandarins in New Delhi are planning to wipe out fossil fuel vehicles from the country’s roads.
  • The government is preparing to phase out the sale of internal combustion engine (ICE) vehicles from 2023, putting a hard stop on their sale in 2030. So, by the time the planned fuel retail network expansion is complete, customers will begin fading. That’s a chilling situation to be in for any business.
  • But oil firms are trying hard to hide the crease on their foreheads. They are betting a massive policy push to popularize electric vehicles (EVs) will not materialize, EVs will remain unaffordable, and the facilities needed to charge EVs will never gain scale.
  • Latest policy rumblings signal oil firms might be on course to lose their bets, and much of their revenue. But it’s possible for them to protect their revenue, despite losing bet, if they embrace the new while still holding on to the old.

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