Mukesh Ambani, the chairman of India's Reliance Industries. Photo: AFP

Indian oil-to-telecom conglomerate Reliance Industries, run by India’s richest man Mukesh Ambani, has spun off its oil-to-chemical business to pursue a strategic partnership, the Press Trust of India reports.

Reliance had begun this process last year for a possible stake sale in its oil business to companies like Saudi Aramco. The new oil-to-chemical business unit will hold Reliance’s oil refinery and petrochemical assets and retail fuel businesses, but not upstream oil and gas producing fields and textiles businesses.

In 2019, Ambani announced the Saudi oil major had entered into an agreement to pick up a 20% stake in Reliance’s oil business at an enterprise value of US$75 billion. However, the Covid-19 pandemic and the crash in global crude oil prices forced Aramco to put off the deal.

But in October, Aramco CEO Amin Nasser reiterated that the company’s “long-term strategy hasn’t changed.” Brokerage firm Credit Suisse recently said Aramco may revive its interest in buying a stake in Reliance if crude oil prices continued to rise.

While announcing its October-December quarter results, Reliance had for the first time reported integrated earnings of the oil to chemicals business. Earlier the refining and petrochemical businesses were reported separately, while fuel retailing revenue was part of Reliance’s overall retail business.

In its earnings statement, refining and petrochemicals, as well as fuel retailing business earnings, were reported as one.

It said that reorganizing refining and petrochemicals as oil-to-chemicals would “facilitate holistic and agile decision making” as well as “pursue attractive opportunities for growth with strategic partnerships.”

Reliance’s oil-to-chemical businesses comprise oil refining and petrochemical plants and manufacturing assets, bulk and wholesale fuel marketing and Reliance’s 51% interest in a retail fuel joint venture with BP of the UK.

It also houses Reliance Ethane Pipeline Limited that operates a pipeline between Dahej in Gujarat and Nagothane in Maharashtra as well as a 74.9% stake that Reliance holds in the joint venture with Sibur. This business unit also includes Reliance’s Singapore and the UK-based oil trading subsidiaries and marketing subsidiary, Reliance Industries Uruguay Petroquimica SA.

Reliance is aiming to reduce its exposure in the oil and petrochemicals business as the world looks to cut down on fossil fuels, and instead focus more on the technology and retail sectors.

It recently attracted an investment of US$20 billion for digital venture Jio Platforms and prominent investors included Google, Facebook and a host of private equity firms. Reliance is also planning to sell about a 15% stake in its retail venture to a clutch of foreign investors.