Reliance Petroleum Highlights

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STRATEGIC ADVANTAGE HIGHLIGHTS

Best of world crude oil has already been tapped and newer ones are high dense with high sulphur which needs special refinery and RPL is few among the one.

Most of refineries are set to process high quality only.

Norms of emissions are now becoming strict (US, EUROPE) and existing refineries are inflexible to meet this norms.

* Demand could outstrip refining capacities and existing refineries unable to process so called dirty crude may have to be shut down
* Heavy (dirty crude) is cheaper than light crude around 5 dollar/barrel and RPL can capitalize on it.
* This leads to gross refining margin go up with the ability to produce superior products from cheaper crude.
* Some of other refineries that plan to expand also will complete their project only on 2011.
* RPL will be one of the 5% with ability to process heavier crude in the world.
* But capital cost for a high tech refining set up is higher than older method by 4 dollar/barrel/day.
* But RPL has managed itself to set up in SEZ, which has tax-redemption on exports 100% for 5 years and later 50% for next 5 years.
* Duty free import of crude oil and capital equipments because of SEZ.
* Technology, knowledge, marketing expertise of RIL can be shared with RPL and hence synergy between both.


CURRENT CAPITAL STRUCTURE

COMPANY HOLDINGS
RIL 75%
CHEVRON 5%
REST 20%

Comments

  1. AnonymousNovember 5, 2008 at 7:48 PM

    Good work...I guess in the current situation of falling GRMs and falling crude price the worth of the stock may be less than 100

    ReplyDelete

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