GOLDMAN SACHS: IN PRAISE OF RELIANCE

Vol 3, PW 13 (24 Jul 99) Midstream & Downstream
     

When Goldman Sachs praises an Indian company, you can be sure it is no ordinary company.

In a report published a day after Reliance Petroleum commissioned its 27m tonnes a year (t/y) greenfield refinery, Goldman took the unprecedented step of describing Reliance stock as a market outperfomer, a recommended exposure to the Indian oil sector. A day earlier (14 July), Reliance defied market cynicism to announce a phase-wise commissioning of its Jamnagar refinery, with the start up of the crude distillation unit.

"It is a tribute to 85,000 construction workers that a project of this scale and complexity can be commissioned in India 6 months ahead of schedule", said Anil Ambani, Managing Director. Reliance reckons the refinery will eventually produce 24.7m tonnes of products, operating at a crude throughput of 27m tonnes, or 540,000 barrels per day (b/d).

First deliveries of diesel (135,000 tonnes) and kerosene (10,000 tonnes) were slated for 20 July. Goldman puts the recent out-performance of Reliance Petroleum shares down to its marketing alliance with Indian Oil Corporation (IOC).

Goldman predicts that Reliance stock will rise further in the months ahead. In the last issue of Petrowatch, it was predicted that the commissioning of Jamnagar would be delayed.

This was based on information that Reliance had not been able to get its Single Buoy Mooring (SBM) operational and that teething problems at the refinery would delay start-up. However, Anil Ambani appears to have taken it as a personal challenge to meet the deadline.

In the days prior to the start-up, he was personally at the site, checking every detail.