UPDATE 2-Chevron to buy Indian refinery stake for $300 mln http://today.reuters.com/investing/financeArticle.aspx?type=mergersNews&storyID=2006-04-12T164458Z_01_N12322216_RTRIDST_0_ENERGY-CHEVRON-UPDATE-2.XML
Wed Apr 12, 2006
(Adds analyst comment)
NEW YORK, April 12 (Reuters) - Chevron Corp. (CVX.N: Quote, Profile, Research) on Wednesday said it agreed to spend $300 million to buy a 5 percent stake in a new refinery being built in India, seeking to build its position in the fast-growing Indian market.
The refinery, being developed by a unit of India's Reliance Industries Ltd., will have the capacity to refine 580,000 barrels of crude oil per day. Reliance will also offer 10 percent of the unit -- Reliance Petroleum Limited -- for sale to the public from April 13 until April 20.
The deal is an important boost for India's ambition to become a major refining hub in Asia and could herald more to come from Chevron in the country, said Raj Gandhi, an analyst with Angel Broking Ltd.
"We may also see Chevron entering the retail space in India in the future by setting up its own petrol (gasoline) stations," Gandhi said. "This it can do without Reliance's help."
The refinery is expected to begin operations in December 2008 and will be located in the western Indian town of Jamnagar, where Reliance already operates a bigger refinery.
The new refinery is expected to process heavier crude oil and will be the world's sixth-largest refinery on a single site, Chevron said. Together, the two sites will constitute the largest refinery complex in the world, the company said.
Chevron said it also has rights to increase its stake to 29 percent. The company also signed two memorandums of understanding with Reliance covering refinery crude supply and product marketing issues and the intent to pursue other collaboration opportunities. (Additional reporting by Hiral Vora in Mumbai)
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