Moving closer to merging its refinery subsidiary Reliance Petroleum with itself,Reliance Industries Ltd has said it will buyout US energy major Chevron Corp’s stake in RPL.
RIL will buy 22.50 crore equity shares or five per cent of RPL’s equity from Chevron. This will raise its stake in the company to 75.38 per cent,besides its board is meeting on Monday to consider buying the rest.
It was not immediately clear at what price RIL is acquiring Chevron’s five per cent stake. Sources,however,said the deal would be at Rs 60 a share,the same price at which the US firm had bought five per cent stake in RPL in April 2006.
When contacted,a RIL spokesperson confirmed the buyout but did not indicate the buyout price. Chevron had acquired 22.5 crore shares in RPL as part of an Equity Investment Agreement with RIL.
As per this agreement,RPL and Chevron were to enter into crude supply and product off-take agreements. “Chevron,RIL and RPL have jointly decided not to proceed with the conclusion of these agreements. Consequently,RIL shall purchase 22.50 crore shares of RPL from Chevron,” a RIL statement said.
The Equity Investment Agreement also provided that,in case these agreements are not executed,Chevron shall sell and RIL shall buy the five per cent shares of RPL.
On execution of these crude supply and product off-take agreements and certain other agreements,Chevron was to purchase additional 24 per cent stake in RPL from RIL.
However,RIL’s holding in RPL will increase from 70.38 per cent to 75.38 per cent after the purchase. RPL in December commissioned its only-for-exports 5,80,000 bpd refinery.
“RIL,with its experience in sourcing of crude and placement of refined products in international markets for the existing refinery at Jamnagar,has chalked out strategy for sourcing of crude,product optimization and placement of products for both the refineries of RIL and RPL,” the statement added.
Besides,in two separate filings yesterday,RIL and RPL said that a meeting of the board of directors will be held on March 2,to consider and recommend the amalgamation of Reliance Petroleum and Reliance Industries,the country’s most valued firm in terms of market capitalisation. The merger will make RIL one of the world’s largest refiners.