Chevron Quits Reliance Petroleum's Project

Chevron is all but certain to pass up its option to take a nearly one-third stake in the world’s biggest new refinery in India, as the dawning of a global recession darkens the outlook for the industry’s margins. The US oil major has until June to decide whether or not to increase the five per cent share it bought in Reliance Petroleum, which is building the 580,000 barrel per day export-oriented refinery in Jamnagar.

A Reliance group official said on Friday that the plant had already begun trial runs. But that $300 million investment, made in 2006 at 60 rupees a share, is now barely profitable as energy markets collapse, and parent firm Reliance Industries has already geared up to go it alone as it faces the daunting task of selling more refined fuel into an oversupplied world market. According to a Reliance official, who declined to be named as he is not authorised to speak to the media, it seems that Chevron is not keen on raising their stake. Originally the intent was that they will add value and increase their stake. All value creation technology, capital etc have been arranged by Reliance Industries.