RIL likely to hive off oil-to-chemical business to unlock value: Report

A week after calling off the $15-billion deal with Saudi Aramco, Mukesh Ambani’s Reliance Industries Limited (RIL) is looking to slice up its oils-to-chemicals division to get new investors easily and maximise value, according to a Mint report.

Similarly, RIL announced on Thursday that it will transfer its Jamnagar syngas project to a subsidiary it owns fully with a view to unlocking value. Used for energy production, syngas is a combination of hydrogen, carbon monoxide and some carbon dioxide that is typically manufactured by gasifying a solid hydrocarbon fuel.

“RIL is looking at the elements of the O2C business in the light of its net carbon zero goals,” a source told the publication.

Also Read | Reliance to restructure and repurpose gasification assets

RIL said the transfer of its assets will help "unlock the value of syngas" and will help the company's transition to renewables as its primary source of energy. Syngas ensures reliability in fuel supply and helps reduce volatility in energy costs. It is used to produce hydrogen in the Jamnagar refinery.

"The gasification project at Jamnagar was set up with the objective to produce syngas to meet the energy requirements as refinery off-gases, which earlier served as fuel, were repurposed into feedstock for the Refinery Off Gas Cracker (ROGC). This enables the production of olefins at competitive capital and operating costs," it added.

Reliance said it targets to have a portfolio that is fully recyclable, sustainable and net carbon zero.

India is a high-growth market and is expected to continue to see a deficit of these high-value chemicals in the foreseeable future.

Also Read | Reliance, Aramco call off $15 bn deal amid valuation differences: Report

It said repurposing the gasification assets will help use syngas as a reliable source of feedstock to produce these chemicals and cater to growing domestic demand, resulting in an attractive business opportunity.

Further, as the hydrogen economy expands, RIL will be well-positioned to be the first mover to establish a hydrogen ecosystem.

With optionality in applications for syngas, the nature of risk and returns associated with the gasifier assets will likely be distinct from those of the other businesses of the company.

This distinct business profile also provides the opportunity to potentially attract a different pool of investors and strategic partners for the gasification assets and new materials and chemicals projects.

(With PTI inputs)