RIL’s O2C business energy transition plan in place, will remain profitable: Ambani

The RIL chairman said that as the cost of renewables would be significantly lower compared to fossil fuel-based energy, it would result in reduced energy costs and improved profitability for the O2C business

Reliance Industries Limited’s (RIL) oil-to-chemicals business (O2C) will transition to a sustainable, green, circular and consumer-integrated, chemicals and materials business, the group's Chairman Mukesh Ambani said on August 28.

Responding to some shareholders expressing concerns over RIL’s refining business as the world moves away from fossil fuels, Ambani said that the company has been watching the global mega trends keenly for over a decade.

“We have already put in place a comprehensive strategy to ensure that all our investments and all our assets will remain not just safe, but actually become profitable,” Ambani said.

The first stage of this strategy is to switch to 100% green energy for captive consumption to ‘net zero’, which will reduce the energy costs and make these assets cost competitive. The second stage is to upgrade the refinery products into downstream value added chemicals for which RIL has developed in-house technology.

“In short, let me assure you that both during and after the energy transition, our Jamnagar refining complex and all other petrochemical complexes will continue to operate profitably,” Ambani said to shareholders.

At the 46th Annual General Meeting (AGM), Ambani said the O2C business operated in a highly volatile global scenario in the last year. The key pillars of the O2C transition would be accelerating the company’s journey to achieve net carbon zero by 2035 through the use of renewables and bioenergy for a sustainable and green business and accelerating circularity and consumer integration, he added.

“We are well on our way to building the new energy ecosystem of manufacturing solar, wind, batteries, hydrogen and bio-energy platforms. This will enable us to speed up the development of our renewable generation assets to deliver round-the-clock electricity for our captive requirements as well as to meet the growing needs of Indian consumers,” he added.

Ambani said that the company has also been working on scaling up its chemical recycling technology to deliver application-specific green products, which is helping Reliance access high-value, high-potential customers in new value chains.

“Some shareholders have raised worries about volatility in the oil industry and its impact. We have acknowledged right from the beginning that the oil industry is unpredictable. As a result, we have put in place systems and processes in such a manner so as to optimize conversion margins, ensuring high asset utilization rather than forecasting the oil price levels in that way. We have successfully turned our OTC business into an annuity-like business unperturbed by external volatilities,” Ambani said in response to shareholders’ query.

RIL’s refinery at Jamnagar would be progressively operated as a ‘Chemicals and Materials Feedstock Production’ engine, he said.

“We started this by converting some low-value refinery streams to recently launched highly specialised halo-butyl rubber grades and a new purified isophthalic acid plant, which is under commissioning,” the RIL chairman added.

Oil and Gas

RIL would enhance production to 30 MMSCMD, which would be 30 percent of India’s gas production and 15 percent of the country’s current gas demand, Ambani said.

“We are well on our way to enhance production to 30 MMSCMD, which will be 30%of India’s gas production and 15% of its current gas demand,” he said.

Reliance with its partner BP revived gas production in the KG-D6 block from near zero a few years back to about 20 million standard cubic meters per day (MMSCMD) in FY23.

“At a time when global energy supplies and prices are witnessing unprecedented volatility and uncertainty, this gas is a major source of clean energy saving up to $7 billion per annum in imports for the country,” he said.

RIL is pursuing further enhancement in production with its exploration efforts in KG-UDW1 and KG-UDW2 blocks in the Krishna-Godavari Basin with an aim to sustain gas production over the next 15-20 years. This year, the company commissioned one of the most complex and cost-efficient deep-water projects, the MJ Field, in KG-D6 Block.

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