Reliance-BP deal may force existing players to revisit biz models

Reliance-BP deal may force existing players to revisit biz models

Mukesh Ambani’s revived interest in the energy value chain particularly retail business will also result in existing players revisiting their business models as well as attract other global players, industry trackers believe.

Ambani’s Reliance Industries Ltd along with BP p.l.c expressed their intent to work in India’s energy downstream business in both unconventional and unconventional fuel, while announcing further investments in their oil and gas exploration asset KG-D6.

It is evident that India has a large investor base in the gas retailing business and smaller customers that are not tapped to the extend possible with bigger players like RIL-BP coming in will have better access to cleaner fuel.

“By smaller customers we mean small outfits, individual households. Commercial entities are already getting supplies wherever network is available, but for smaller quantities to be supplied even pipeline network is to be expanded,” said a senior executive from one of the entities already into gas retailing in India.

For example, compressed natural gas for commercial consumers at present is only from imported gas or liquefied natural gas (LNG). According to Prabhat Singh, Managing Director & CEO, Petronet LNG Ltd, who has been advocating LNG retailing and in fact his company has been proposing to heavy commercial vehicles companies to use LNG as fuel for meeting their additional demand, “it has now become a B2C business. Besides, there has been lot of opportunities that has been created in the segment with lower prices. There is enough market for everyone. But, at present small players cannot do it, the segment needs big players”

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Energy expert Narendra Taneja sees this more as investments and plans in natural gas starting from well head to retail. “This is good news. This will help India attract more investment in natural gas sector across the chain – from upstream to midstream to retail to LNG. With BP recommitting itself Shell probably will look at India afresh and we will also see other Western and Middle Eastern companies as well as Russians looking at India.”

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Credit- The Hindu Businessline

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