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RIL investing Rs 110,000cr in oil & petrochemical business
02 Sep '16
3 min read
In order to improve cost positions, strengthen integration and also deliver growth, India's biggest private sector company Reliance Industries Ltd (RIL) is investing more than Rs 110,000 crore in its petrochemicals and refining business. The company is also de-risking these businesses by shifting to an annuity like strong cash-flow generating portfolio.
Speaking at the 43rd AGM, RIL chairman Mukesh Ambani also added, “In the past two years, our earnings have grown, while oil prices have dropped from $100 to below $40 per barrel, demonstrating the success of the new business model.”
According to Ambani, RIL's petrochemical business had the highest ever volumes and earnings and its margins were among the top five companies globally, while posting record net profits despite no contribution from its upstream business and largest ever capital expenditure in a year.
The petrochemicals segment of RIL achieved record EBIT of Rs 10,221 crore in fiscal 2016, up 23 per cent year-on-year and in turn delivered one of the best performances in the global petrochemical industry.
Explaining the reasons for the record EBIT reported by the petrochemicals segment, Ambani said, “Our integrated business model, combining strong downstream positions and risk management enabled us to grow profits despite soft oil and gas prices. We are now investing to double the capacity of this business.”
Reliance is building amongst the world's largest and most integrated crackers in Jamnagar that will use 'off gases' from the refinery as feedstock with a capacity in excess of 1.5 million metric tons per annum, a unique configuration possible, only due to the scale and complexity of its refinery.
“The company is executing a project of this scale at about half the capital cost of similar crackers being built in North America. We have made substantial progress in this project and target it to be mechanically complete by December of this year,” Ambani informed.
The cracker portfolio of Reliance is currently dependent on domestic sources of feedstock including from its refinery. So, while Ethane is the feedstock for over 65 per cent of cracker capacity in North America, the RIL portfolio needs dedicated long-term supply of feedstock for sustained competitiveness.
“We were the first company globally to conceptualise large scale imports of Ethane from the US as feedstock for our cracker portfolio, a project, which involves dedicated ships, pipelines and modifications to existing facilities. This innovation will provide us feedstock assurance and flexibility for the long term,” he stated.
As per the RIL chairman, the ships are expected to be delivered over the next two quarters and the full project will be ready by the end of this fiscal.
Last year, RIL commissioned a 650,000 tons per annum Polyethylene Terephthalate (PET) plant and state-of-the-art 2.3 million tons per year Purified Terephthalic Acid (PTA) plant at Dahej.
The company is also expanding its polyester presence in setting up one of the largest PX plants in the world at Jamnagar, in which pre-commissioning activities have commenced with production slated to begin in the next few weeks. (AR)
Speaking at the 43rd AGM, RIL chairman Mukesh Ambani also added, “In the past two years, our earnings have grown, while oil prices have dropped from $100 to below $40 per barrel, demonstrating the success of the new business model.”
According to Ambani, RIL's petrochemical business had the highest ever volumes and earnings and its margins were among the top five companies globally, while posting record net profits despite no contribution from its upstream business and largest ever capital expenditure in a year.
The petrochemicals segment of RIL achieved record EBIT of Rs 10,221 crore in fiscal 2016, up 23 per cent year-on-year and in turn delivered one of the best performances in the global petrochemical industry.
Explaining the reasons for the record EBIT reported by the petrochemicals segment, Ambani said, “Our integrated business model, combining strong downstream positions and risk management enabled us to grow profits despite soft oil and gas prices. We are now investing to double the capacity of this business.”
Reliance is building amongst the world's largest and most integrated crackers in Jamnagar that will use 'off gases' from the refinery as feedstock with a capacity in excess of 1.5 million metric tons per annum, a unique configuration possible, only due to the scale and complexity of its refinery.
“The company is executing a project of this scale at about half the capital cost of similar crackers being built in North America. We have made substantial progress in this project and target it to be mechanically complete by December of this year,” Ambani informed.
The cracker portfolio of Reliance is currently dependent on domestic sources of feedstock including from its refinery. So, while Ethane is the feedstock for over 65 per cent of cracker capacity in North America, the RIL portfolio needs dedicated long-term supply of feedstock for sustained competitiveness.
“We were the first company globally to conceptualise large scale imports of Ethane from the US as feedstock for our cracker portfolio, a project, which involves dedicated ships, pipelines and modifications to existing facilities. This innovation will provide us feedstock assurance and flexibility for the long term,” he stated.
As per the RIL chairman, the ships are expected to be delivered over the next two quarters and the full project will be ready by the end of this fiscal.
Last year, RIL commissioned a 650,000 tons per annum Polyethylene Terephthalate (PET) plant and state-of-the-art 2.3 million tons per year Purified Terephthalic Acid (PTA) plant at Dahej.
The company is also expanding its polyester presence in setting up one of the largest PX plants in the world at Jamnagar, in which pre-commissioning activities have commenced with production slated to begin in the next few weeks. (AR)
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