Reliance Global To Buy BP’s Malaysian Plant

Reliance Industries Limited, India’s petrochemical and energy giant is in talks with British Oil Company’s petrochemical company about its acquisition of the company’s plant in Malaysia for USD 230 million. Embarking upon this acquisition will enable it to develop a completely integrated system for all its businesses. These talks about the complete acquisition of BP’s purified terephthalic acid plant by Reliance Global Holdings in Malaysia have been held in Hong Kong.

Head of BP’s aromatic business in Asia, James Yim, mentioned that Mukesh Ambani led Reliance is already their natural owner owing to the huge consumer base of Recron Malaysia, Reliance Group’s arm. Besides, RIL is a major feedstock supplier at Kautan. Accounting for a production capacity of 6,10,000 tones per year (tpa), this plant is located in the state of Pahang on the east coast of the Malaysian Peninsula. Rolled out in 1996, this plant is powered by BP’s own PTA Technology. On the other hand, RIL’s PTA plants are based on Invista‘s technology. The acquisition will pave way for the protection of both the technology separately.

Sources claim it to be an all cash deal that will include the net value of working capital and cash based on the Malaysian Ringitt to the USA Dollar at the exchange rate of 3.1. Hence, the final value cannot be determined now, as it will depend on the Ringitt exchange rate at that particular time. The present BPCM staff may be transferred to the new ownership under the same terms and conditions. This acquisition will also enable RIL to leverage its Hualon’s polyester production.

Previously, BP chalked out a divestment program where it intended to position itself as a smaller company. This change in strategy would enable them to utilize its resources effectively by shifting its focus to promising markets and as a result, augment the investor’s confidence. It had relinquished from its ethylene and polyethylene related activities to Petronas, state owned company in 2010 that plunged owing to the oil spill in Mexico. Sources claim that it has further sowed seeds for divesting assets estimated to be around $14 billion before the end of this year.

Talking about their global PTA business that accounts for a one-fifth of global PTA production capacity, Nick Elmslie, CEO of BP Petrochemicals stated that they would continue to employ PTA Technology regarding deploying innovative technology in the most bustling areas like China, setting the ground for a massive expansion program. They are looking for a time when their technology will give them an edge over others with respect to high utilization rates in OECD markets.


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