On August 28th, Mukesh Ambani, the Chairman of Reliance Industries Limited (RIL), announced that the company’s oil-to-chemicals business (O2C) will undergo a transformation towards becoming a sustainable, environmentally friendly, circular, and consumer-centric chemicals and materials enterprise.
In response to certain shareholders who had voiced apprehensions about RIL’s refining division in light of the global shift away from fossil fuels, Ambani reassured them by stating that the company has been closely monitoring major global trends for more than 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 initial step in this approach involves transitioning to entirely sustainable green energy for internal use, aiming to achieve a ‘net zero’ carbon footprint. This move is expected to lower energy expenses and enhance the competitiveness of these assets. The subsequent phase entails enhancing the quality of refinery products by converting them into higher-value downstream chemicals, utilizing proprietary technology developed by RIL.
“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.
O2C
During the 46th Annual General Meeting (AGM), Ambani discussed how the O2C business had to navigate a volatile global environment in the past year. He outlined the primary strategies for the O2C transition, which include expediting the company’s efforts to achieve carbon neutrality by 2035 using renewable energy sources and bioenergy to promote sustainability and eco-friendliness in their operations. Additionally, he emphasized the importance of advancing circularity and enhancing consumer integration as part of their business strategy.
“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.
Mr. Ambani mentioned that the organization has been actively enhancing its chemical recycling technology to produce eco-friendly products tailored for specific applications. This effort has enabled Reliance to tap into lucrative markets with discerning customers in emerging 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 as to optimize conversion margins, ensuring high asset utilization rather than forecasting the oil price levels in that way. We have successfully turned our O2C 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 specialized halo-butyl rubber grades and a new purified isophthalic acid plant, which is under commissioning,” the RIL chairman added.
Oil and Gas
Ambani announced plans to increase production to 30 million metric standard cubic meters per day (MMSCMD), a quantity representing 30% of India’s total gas production and accounting for 15% of the nation’s current gas consumption.
“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, in collaboration with BP, revitalized natural gas production in the KG-D6 block, increasing it from almost zero a few years ago to approximately 20 million standard cubic meters per day (MMSCMD) in the fiscal year 2023.
“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 actively working to boost production by expanding its exploration activities in the KG-UDW1 and KG-UDW2 blocks within the Krishna-Godavari Basin. Their primary goal is to ensure consistent gas production for the upcoming 15 to 20 years. Notably, this year, the company successfully initiated operations for the MJ Field, a highly intricate and economically efficient deep-water project located in the KG-D6 Block.
On Carbon Fibre
Mr. Ambani has announced the establishment of India’s inaugural, state-of-the-art Carbon Fibre facility in Hazira, Gujarat. This Carbon Fibre platform will encompass both Carbon Fibre and Carbon Fibre Reinforced Plastics. His objective is to secure a position within the top three global players in the Carbon Fibre and Carbon Fibre fiber-reinforced plastic composites industry.
On Green Hydrogen
During the previous annual general meeting (AGM), the company was still in the process of addressing two crucial elements required to achieve competitive costs for Green Hydrogen and its related products. These aspects included reducing the expense of renewable power generation and lowering the installation costs of electrolyzers, particularly for large-scale deployment.
The company outlined plans to establish an integrated manufacturing ecosystem for solar and wind energy storage, which aims to deliver cost-effective renewable power solutions. Moreover, they expressed confidence in their ability to achieve the desired electrolyzer cost targets, which would subsequently facilitate the production of Green Hydrogen.
Collaborating closely with technology partners, the company is progressing toward successfully demonstrating these advancements at the megawatt scale. They intend to capitalize on their engineering expertise, extensive manufacturing capabilities, and localization strategies to optimize these processes at a much larger, gigawatt scale.
Simultaneously, the company revealed intentions to establish a comprehensive, automated manufacturing facility for electrolyzers at the gigawatt scale. This strategic move will pave the way for substantial Green Hydrogen production at their Jamnagar facility. As part of their strategy, they plan to gradually transition their internal hydrogen requirements and integrate their operations with the production of Green Ammonia and Green Methanol, targeting both domestic and international markets.