RIL closes in on overseas buy

May Buy Refinery Or Petrochem Plant In US Or Europe By Year-End

 RELIANCE Industries, India's biggest refiner, may buy a refinery or a chemicals unit before the end of the year in the US or Europe as it attempts to buy up inexpensive assets and catch up with rivals Essar, who are aggressively bidding for global capacities despite lagging behind Reliance locally. "We are in advanced talks with looking at refinery and petrochemical units for acquisition in the US and Europe, mostly in the US," Maurice Bannayan, senior vice-president at RIL, was quoted as saying by Reuters news agency on Wednesday. 
    The RIL overseas acquisition buzz started getting louder last month when it raised Rs 3,188 crore by selling its treasury shares. Also, India's second-biggest private oil refiner Essar Oil have bid to acquire UK's largest oil refinery, operated by The Royal Dutch Shell. The Ruia's run Essar also brought a 50% stake in Kenya's oldest oil refinery in Mombassa for an undisclosed amount, even as one of Reliance's unit in Europe went bankrupt. An RIL spokesperson declined to comment. The targets for Reliance may be many, analysts speculate. Assets of Italy's Eni, US's Valero Energy Corporation and Sunoco, Royal Dutch Shell's Stanlow, Harburg and Heide refineries, the Grangemouth refinery operated by British chemicals maker Ineos, and Swissbased Petroplus's UK refinery could be some of the targets, analysts say. 
    "Be it refineries or petrochemical units, they are available dirt cheap due to falling demand," said an equity analyst with a Mumbai-based brokerage firm. "Most of US and European refiners and chemical firms have been looking to sell domestic refineries as demand for fuels and petrochemical products has fallen more sharply than most other areas of the world." RIL has cash reserves to the tune of $5 billion. 
    Valero Energy, which operates 16 refineries stretching from California to Canada to the Caribbean, with a combined capacity of processing three million barrels per day (bpd) of crude oil, is planning to shut down and sell some of them due to steep fall in refining margins. Valero's 235,000 bpd Aruba refinery has been on the block since 2007. 
    "The company is not necessarily willing to sell any refineries, but strategic alternatives would include possible refinery or unit shutdowns to contend with crushed demand in the recession," an international newswire quoted last week Valero's spokesman Bill Day as saying. Sunoco, which shuttered it 100,000 bpd Eagle Point refinery in the US due to falling demand, plans to sell its chemical business. 
    "We don't see it getting better any time quickly," chief executive Lynn Elsenhans told analysts on a conference call recently. It would decide on the fate of its chemicals business later this year as it examines the bids, she had said.

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