Reliance Industries Limited (RIL) has taken a giant leap forward in terms of making India the biggest exporter of Petroleum Products to the African Nations. It aims to start off by entering into an Memorandum of Understanding (MoU) with Rohm and Haas to jointly survey the construction of the world-scale Acrylic-monomer complex in Jamnagar. This complex aims to be the world’s single largest producer of Petroleum products in the coming years, with its proximity to the Jamnagar Oil Refinery, which is already the world’s largest green field refinery with a capacity of producing 660,000 barrels of oil per day. The new export-oriented refinery will shoot up these figures to a whopping 1.2 million barrels of oil per day.
To come to terms with selling the huge amount of oil produced, RIL has acquired a majority stake in the Gulf Africa Petroleum Corporation (GAPCO) that happens to be the single largest Marketing Company handling the marketing of Petroleum products in Tanzania, Uganda and Kenya. These three countries have a sizeable import bill regarding petroleum. In East Africa, the multinational oil companies have, in the past, dominated the marketing of petroleum products. Liberalization in these three countries will bring more competitiveness into the existing market, thereby helping the new players like RIL to set foot, in what was previously, the stronghold of ESSO and Shell. GAPCO has been managing marketing of ESSO previously with more then 250 retail outlets and its large storage terminal facilities. Experts say that the overtake of GAPCO is more of a distress sale as this company was running into accounting losses adding up to $400 million, but RIL terms this acquisition as a strategic step in building its strong hold in East Africa because GAPCO is a multinational petroleum marketing company with operations in East Africa and a 42% share of a market estimated at $150 million.
It is one of the largest independent petroleum marketing and trading organizations in East Africa, and is primarily involved in the import, supply and transport of oil products to countries in East and Central Africa, which is a pool of immense possibilities considering the fact that these are developing economies and crude oil is the world’s most actively traded commodity.Coming to the Indian scenario, this new acquisition led to the RIL shares rising marginally with stocks closing at Rs. 1971 at BSE. This acquisition can be viewed as a step against the monopoly of Organization of Petroleum Exporting Countries (OPEC). OPEC has been exercising its control over the international oil prices by suddenly increasing the crude oil prices to meet its developed needs, and thus severely hampering the developing economies. RIL had discovered untapped oil and gas fields in Krishna-Godavari delta and the setting up of extra Acrylic monomer complex can be viewed as an increasing indigenous capacity and will help in decreasing India’s reliability on petroleum imports by some amount, thus saving foreign exchange. The installation may also help common people who are being bugged by the rising and roll back of petroleum prices too often and this will also ease up the transport industry, which helps in thriving of any economy. OPEC has exercised its control over crude oil prices for quite a long time and this deal may be the start of the events that may lead to oil prices being decided uniformly on the basis of fair energy needs of both developing and developed countries.
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