Singapore (Platts)--28 Nov 2017 126 am EST/626 GMT
Some of the recent strategic steps that India's Reliance Industries has taken in its oil and gas business speaks volumes about its long-term vision - the company has realized that in order to make it even bigger in one of the fastest growing energy markets, its big domestic push has to come now or never.
Gradually giving up its overseas oil and gas assets
Domestic market too lucrative to focus anywhere else
Policy reforms whet appetite to invest more at home
A series of oil and gas policy reforms in India, robust oil products demand and a renewed push to revive the upstream sector, as well as a push towards a gas-based economy, have given Reliance - ranked 203 in terms of revenue in the Fortune 500 list for 2017 - the opportunity to aim for the sky at home, while toning down its overseas ambitions in the energy sector.
And why not? The company is enjoying refinery margins that are the highest it has seen in nine years. It is also fast re-opening retail oil outlets to grab a larger share of the country's rising retail oil demand, more than tripling its number of outlets in less than three years.
In the upstream sector, Reliance and BP are jointly investing up to $6 billion to develop already-discovered deep water gas fields, a move that would help India reduce its import dependence and contribute to the country's incremental gas demand by 2022.
"The focus for Reliance now seems to be the domestic market as plans for expansions and renewed investments are underway. We expect the firm to increasingly consider divesting other upstream assets outside of India, primarily in the US," said Senthil Kumaran, senior analyst at Facts Global Energy.
Reliance, which is also ranked 106 in the Forbes Global 2000 rankings for 2017, has been gradually selling its overseas upstream assets recently as it struggles to reap attractive returns on them, the latest being its decision to divest its interest in the Marcellus shale play in northeastern and central Pennsylvania.
"Reliance is keen to increase their share in the domestic market where margins have been strong even since subsidies were removed, which means product exports by them should come off," said Nevyn Nah, oil products analyst at Energy Aspects.
"Selling shale assets, which are not generating any cash flow and do not fit well into their refinery configuration, does not look like a bad idea."
