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Reliance carves out energy roadmap to push oil-to-chemicals, new energy growth

Highlights

Eyes $10 billion investments to push oil-to-chemicals growth

Aims to expand domestic gas footprint through upstream revival

Pledges to grow energy business ten-fold over next few years

  • Author
  • Sambit Mohanty
  • Editor
  • Surbhi Prasad
  • Commodity
  • Electric Power Energy Transition Natural Gas Oil Petrochemicals
  • Topic
  • Energy Transition Hydrogen: Beyond the Hype

The energy roadmap of Reliance Industries will witness expansion of its oil-to-chemicals business, plentiful upstream investments, as well as multi-fold growth of its new energy business involving numerous global and domestic partnerships on clean fuels, the Indian conglomerate's chairman Mukesh D. Ambani said.

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Speaking at the company's annual general meeting Aug. 29, Ambani said Reliance was aiming to maximize oil-to-chemicals integration by converting its feedstock streams to high-value chemicals and green materials. He also said that Reliance would invest about $10 billion to expand capacities in existing and new value chains over the next five years.

The company's vision to expand its presence in petrochemicals comes at a time when many other state-run and private refiners are also expanding their petrochemical footprint to remain profitable in the event of changing energy landscape taking a toll on demand for transport fuels, such as gasoline and gasoil.

According to Platts Analytics of S&P Global Commodity Insights, India's oil demand is expected to rise from about 5 million b/d this year to about 9 million b/d in 2048 before it starts to decline. Over this period, India will need to nearly double its current refining capacity in order to remain as a net exporter of key products by 2050.

Analysts and industry sources said the company's oil focus would unlikely get diluted anytime soon and the twin strategic push in both traditional and new energy segments is a sign that there was a need for oil-focused companies to still ensure investments in fossil fuels while diversifying into other forms of energy.

Petrochemicals, gas vision

The company plans to expand its polyester chain capacity by adding 3 million mt/year purified terephthalic acid lines and 1 million mt/year capacity of polyethylene terephthalate lines at Dahej, Gujarat state, by 2026. It also plans to pump funds into the polyester filament yarn and polyester staple fiber segment, Ambani said.

"We will further integrate our composites business with carbon fiber to produce carbon fiber composites. Besides other applications, carbon fiber composites are also used to meet the rapidly growing light-weight requirements of mobility and renewable energy," Ambani said.

India aims to raise the share of natural gas in its overall energy mix from the current 6.7% to 15% in 2030. Keeping that vision in mind, Ambani said the Krishna-Godavari basin, known as the KG-D6 block, would have a 30% share in India's gas production by the end of 2022.

The KG-D6, discovered in 2002, is India's largest deposit of natural gas. Reliance is the operator of the KG-D6 block, with a 66.67% participating interest, while UK major BP has a 33.33% participating interest in the block.

Currently, two of the three clusters from the block contribute 20% towards India's domestic gas production. The third, the MJ Cluster, is scheduled to start production by year-end.

"This will help meet India's growing demand indigenously, leading to import savings of nearly $9 billion per annum," Ambani said, adding that natural gas would be a major source of clean and affordable energy for India, particularly in times of global energy crisis.

Energy transition initiatives

Ambani said decarbonizing the global economy would require multi-decade investments in green and clean energy to the tune of $5 trillion per year globally, offering unprecedented opportunities for growth.

"Hence, the sheer magnitude of this responsibility and opportunity has made our new energy business far more ambitious, far more transformational, and far more global in scope than anything Reliance has ever done before," he said, adding that Reliance would expand its new energy business ten-fold over the next few years.

Ambani said Reliance was expanding theirpartnerships with world's leading start-ups and academic institutions to scale up the business in order to deliver lowest-cost green energy. "As a result of these combined strengths, our new energy business will help India become a net exporter of energy."

Reliance is aiming to push conversion of its conventional hydrogen capacity to renewable hydrogen over the next few years, Ambani said.

In his speech last year, Ambani had said that India can produce renewable hydrogen for $2/kg before the turn of the decade and could potentially reach $1/kg in that time.

Platts World Refinery Database shows Reliance Industries having a stable conventional hydrogen capacity of 14.22 MMcf/d from 2022 to 2025. The capacity was seen stepping up to 34.22 MMcf/d from 2026 to 2030.

"We will also be establishing 20 GW of solar energy generation capacity by 2025. This will be entirely consumed for our captive needs of round-the-clock power and intermittent energy for green hydrogen. Once proven at scale, we are prepared to double the investment to scale up our manufacturing eco-system," Ambani said.

He said Reliance had extensively started consuming biomass as fuel to produce green energy at scale. The company has replaced almost 5% of power consumption at its Dahej and Hazira sites by green energy.

"Reliance has commenced its journey to become net carbon zero by 2035 with a set of concrete actions. I feel confident that such initiatives, coupled with transition to renewable power for our oil-to-chemical assets, will accelerate our journey to become net carbon zero," he added.