Reliance may cut oil-to-chemical business to unlock value

As a first phase of the new strategy, RIL on Thursday decided to transfer the gasification assets of the company to a wholly owned subsidiary.

RIL’s oil-to-chemical assets include its refining, chemicals, fuel retail and bulk wholesale marketing businesses.

“RIL is looking at elements of the O2C business in the light of its net carbon zero targets,” said one of the people mentioned above.

The company may close more such businesses, the person said, requesting anonymity.

An RIL spokesperson did not respond to an email seeking comment.

In a statement, RIL said the restructuring of its gasification assets will allow it to unlock the value of Syngas with a collaborative and asset-light approach, which includes engaging investors in the gasifier subsidiary.

Syngas is a fuel gas mixture of hydrogen, carbon monoxide and often, some carbon dioxide. Syngas as a fuel ensures supply reliability and helps to address volatility in energy costs. It is also used to produce hydrogen for the Jamnagar refinery.

“As RIL progressively transitions to renewable energy as its primary source of energy, more syngas will become available to upgrade to high-value chemicals, including C1 chemicals (compounds containing one carbon atom) and hydrogen . In addition, the carbon dioxide released during the production of hydrogen is highly concentrated and easy to capture. These steps will help in reducing the carbon footprint of the Jamnagar campus rapidly.”

In September, RIL chairman Mukesh Ambani said that as efforts are being made globally to create green hydrogen, India could be the first country to reduce the cost of fuel to $1 per kg within a decade.

RIL is investing 75,000 crore in green energy initiatives, including the Dhirubhai Ambani Green Energy Giga Complex in Jamnagar over the next three years, as the refining and petchem major shifted its focus from hydrocarbons to renewable energy. RIL has set a target of becoming a net-zero carbon company by 2035.

RIL invested $4 billion in installing 10 synthetic gasifiers in 2012 to convert petcoke into gas to meet its entire fuel requirement at refineries, and 6.5 million Eliminates petcoke production of tons per year. Its two cokers.

The technology for petcoke gasification, RIL said in 2012, would help it produce 23 mscmd (million standard cubic meters a day) of syngas and reduce the consumption of R-LNG (regasified-liquefied natural gas) for its refineries. will help to do so. However, the project saw a delay of three years until the LNG prices eased.

RIL’s latest statement said it is aiming to build a portfolio that is completely recyclable, sustainable and net carbon zero.

Its energy needs will be achieved by transitioning to high-value materials and chemicals with renewable energy as a source of fulfillment.

Overall, these steps will help in rapidly reducing the carbon footprint of the Jamnagar campus, the RIL statement said.

According to Morgan Stanley Research, RIL’s move to liquidate its petcoke gasifier assets is another step towards monetizing the potential synergy between its existing energy infrastructure and new energy plans.

“While investors have been skeptical about the return on the petcoke gasifier business for the past five years, the environment of high global gas prices, the gasifier’s ability to produce hydrogen, also known as Blue Hydrogen (using carbon capture) and Syngas’s gasifier (valuable in the production of high value-added chemicals) – all of which now make it a highly profitable investment after many years of challenges,” Morgan Stanley Research said in a November 25 report.

The gasifier output of carbon dioxide is highly concentrated and can be easily captured, reducing the cost of carbon capture.

This will help reduce RIL’s net carbon footprint and eventually integrate with plans on hydrogen electrolysers and solar/renewable electricity.

RIL said it wants to attract strategic investors for gasification and new material/chemical projects.

RIL shares climbed 6.1% on Thursday 2494.40, outperformed the benchmark Sensex, up 0.78%.