Chevron is looking at exercising the option of enhancing its stake in the second refinery from the Reliance stable before it goes on-stream.
NEW DELHI: American petroleum major Chevron may soon increase its stake in the Mukesh Ambani-promoted Reliance Petroleum Ltd (RPL) that is setting up a 29 million tonne grassroots refinery in a special economic zone in Jamnagar, Gujarat.
Chevron already holds 5% in the company that came out with an initial public offer in April 2006.
Sources told DNA Money that Chevron is looking at exercising the option of enhancing its stake in the second refinery from the Reliance stable before it goes on-stream.
Chevron picked up 5% equity for $300 million, with an option of increasing it to 29%, in a pre-IPO placement of RPL shares on the eve of launch of the company’s IPO on April 12, 2006.
A Chevron spokesperson in New Delhi told DNA Money: “Chevron was looking at opportunities along the entire energy value chain.”
She did not elaborate on the kind of opportunities the company was looking at in India.
In an interview to Dow Jones Newswires in Bangkok on Friday, Chevron Asia South Ltd managing director Steve Green said his company was also evaluating potential exploration projects in India.
The company plans to invest $4 billion in Asia this year.
According to Green, most of this investment will be mainly in exploration and production but sources do not rule out the company enhancing stake in RPL, Chevron’s only direct investment in the petroleum sector in India, except for a presence in the lubricants.
The investment in RPL is through Chevron India Holdings Pte Ltd, Singapore, a wholly owned subsidiary of Chevron Corporation.
On the status of refinery construction, RPL sources said chairman Mukesh Ambani has issued instructions for early completion of the refinery project within 30 months from the commencement of work at the site.
The project that was scheduled for completion in December 2008 is expected to be ready by June 2008. Work on the project started sometime in December 2005.
The RPL share, which had listed at Rs 102 on May 11, 2006, following the IPO, which was priced at Rs 60, has risen around 30% in the last two months.
The share closed at Rs 92.20 on Friday.
“With the construction at the refinery site going on in full swing, the share price is further going to rise and this has set Chevron thinking of increasing its share in the company,” said an industry source.
Hundred per cent foreign direct investment is permitted in private refineries in India under the automatic route. Automatic route means companies do not need government permission first to plan and invest in a project.
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