Wednesday, September 5, 2007

Reliance Acquires GAPCO

Reliance is good at finding oil, refining it and making petrochemicals. But it hasn''t succeeded in the marketing business at home. So its decided to go overseas to sell oil by buying out Mauritius headquartered Gulf African Petroleum Corp - GAPCO.

The GAPCO acquisition will give RIL access to the African market and it might be an outlet to sell oil from the new refinery coming up at Jamnagar.

RIL''s export-oriented refinery will start producing by December 2008. It will produce 7,00,000 barrels of fuels every day. It''s GAPCO acquisition makes sense because the company has a distribution network in Tanzania, Uganda, Kenya. Besides, it also operates large storage terminals in Dar Es Salaam and has over 250 outlets in retail and industrial markets. GAPCO could also add synergies to RIL''s value chain. The African countries are risky but there are signs that the economies are growing fast and growth could continue. Besides, RIL will get access to overseas markets at valuations that are attractive.

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