RIL in Talks for BP’s Malaysia Plant

Deal for petrochemicals unit will help Indian company streamline ops

Reliance Industries is in talks with British oil giant BP to buy its petrochemicals plant in Malaysia as it seeks to replicate its domestic success in building fully integrated operations in all its businesses. 
India's largest private sector company has held talks with BP officials in Hong Kong about the 610,000-tonne PTA plant in Malaysia. "Serious discussions are happening," an investment banker with direct knowledge of the matter said. "BP will never comment on speculation," Zukifli Othman, manager (communications & external affairs), BP Malaysia, told ET. An RIL spokesperson did not respond to a set of questions on the issue till the time of going to press. 
The plant may not be worth much (about . 250 crore is the estimate from independent industry executives), but it could ensure that RIL's operations in Malaysia are fully integrated, as they are in India. Integration (where all raw material is produced in the same group) helps cut costs and ensure supply in hard times. RIL's Malaysia assets were bought from Hualon, the South-East Asian nation's largest polyester maker, in 2007 when polyester profit margins had plummeted. The acquisition of the PTA plant in Kuantan — located in the state of Pahang on the east coast of Malaysian peninsula — will help RIL integrate it with Hualon's polyester capacities. The world's largest polyester producer is currently buying PTA from local producers. BP kicked off a $38-billion divestment programme in 2010 to reposition itself as a smaller company with focus on promising markets, and to raise cash to shore up investor confidence following the oil spill in the Gulf of Mexico. Since then, it has divested assets worth $24 billion. 
In September 2010, BP sold its ethylene and polyethylene capacities in Malaysia to state-run company Petronas. The British petroleum giant aims to divest another $14 billion of assets by the end of next year.