Strategic Objective

Build Reliance as one of the world’s leading O2C, New Energy and New Materials company with a sustainable and circular business model

67.8 MMT

Production meant for sale

78.2 MMT

Total throughput

Oil to Chemicals

The Oil to Chemicals (O2C) business portfolio spans transportation fuels, polymers and elastomers, intermediates, and polyesters. The O2C business includes world-class assets comprising refineries and petrochemical units that are deeply and uniquely integrated across sites along with logistics and supply chain infrastructure.

The RIL O2C business includes a 51% equity interest in a fuel‑retailing JV with bp – Reliance BP Mobility Limited (RBML) – operating under the brand name Jio-bp, and a 74.9% equity interest in Reliance Sibur Elastomers Private Limited (RSEPL).

The integrated O2C business structure enables an integrated decision-making approach that helps to optimise the entire value chain from crude to refining to petrochemicals to the B2B/B2C model. The O2C business will further leverage technology and its existing assets and streams to maximise conversion of crude to chemicals and materials, with an aim to create a sustainable, holistic, circular materials business.

Nikhil
R. Meswani

Hital R.
Meswani

Akash
Ambani

Isha
Ambani

Anant
Ambani

P. K. Kapil

Sanjiv
Singh

Srinivas
Tuttagunta

J. Rajaraman

Harish
Mehta

Amit
Chaturvedi

Puneet
Madan

Sanjeev
D. Sharma

Hemant
D. Sharma

Piyush
Bhatt

C. S. Borar

Ashwani
Prashara

Seema
Nair

Industry Overview

Transportation Fuels

In FY 2023-24, the transportation fuel sector faced challenges related to geopolitics, shifts towards energy transition, environmental issues and economic concerns. Global oil demand rose by 2.2 mb/d to 102.4 mb/d, while supply increased by 1.6 mb/d to 102.1 mb/d. OPEC effectively managed oil prices through quota restrictions. The Brent crude oil price averaged US$ 83/bbl amidst volatility. In FY 2023‑24, global refinery crude throughput increased by 1.5 mb/d to reach 82.3 mb/d, despite volatility stemming from geopolitical tensions. Moreover, tanker markets rose due to longer ton-miles resulting from changes in trade patterns.

During FY 2023-24, positive trends were observed in global demand, with gasoline demand increasing by 813 kb/d, diesel demand growing by 272 kb/d and jet fuel demand surging by 1 mb/d. Future demand and market dynamics may be impacted by geopolitical tensions.

The domestic Electric Vehicle (EV) industry emerged strongly, boasting over 13,000 charging stations and a 4 million EV parc, signaling significant growth potential. Aviation, propelled by the UDAN scheme, expanded with 149 civil airports.

Polymers and Elastomers

Global ethylene demand increased by 2% Y-o-Y to 181 MMT in CY23, while capacity addition of 9 MMTA resulted in a lower operating rate by 2%.

Global Polymer demand touched 246 MMT in CY23, compared to 245 MMT in CY22. PE and PP demand grew by 0.5% and 1% respectively, while PVC demand dropped by 0.6%. Global demand for SBR decreased by 6.6% in CY23, while PBR demand decreased by 2.5% due to subdued vehicle sales and inventory destocking.

Domestic PP, PE and PVC demand grew by 9%, 20% and 9% respectively driven by infrastructure, automotive, e-commerce, FMCG and agriculture sector demand. Indian SBR and PBR markets expanded by 4% and 10% Y-o-Y, respectively, driven by robust OEM demand.

Intermediates and Polyesters

In CY23, global intermediaries demand rose 2% to 162 MMT amid crude price volatility and sluggish Chinese recovery. Global PX demand remained flat at 50 MMT in CY23, while supply grew by 6%, led by new capacity additions. PTA and MEG witnessed 3% growth due to higher downstream polyester operating rates. Global polyester demand grew by 4% to 88 MMT in CY23, primarily driven by recovery in Chinese downstream operations.

Domestic polyester demand grew by 4%. PET witnessed strong growth of 13%, followed by PFY at 2%, while PSF demand was marginally down by 2%. PET demand saw an uptick due to strategic purchasing by major brands in view of ICC World Cup and state elections. Slowdown in exports of polyester and downstream products impacted growth of staple filament.

Business Performance

FINANCIAL PERFORMANCE

O2C revenue for FY 2023-24 witnessed a 5.0% Y-o-Y decline to ` 564,749 crore, primarily on account of lower product price realisation following a 13.5% Y-o-Y decline in average Brent crude oil prices. This was partially offset by higher volumes.

O2C EBITDA for FY 2023-24 was marginally higher at ` 62,393 crore with optimised feedstock sourcing, advantageous ethane cracking, and lower SAED impact, although the margin environment across transportation fuel and downstream chemicals remained weak throughout the year.

PRODUCTION MEANT FOR SALE

(In MMT)

Transportation Fuels

RIL’s transportation fuel segment’s overall production meant for sale was up due to higher throughput and healthy domestic demand. Despite a challenging margin environment due to heightened refinery supply and global dynamics, RIL effectively navigated the business environment. Cracks in key fuel categories declined: Singapore gasoline 92 RON cracks averaged US$ 11.6/bbl (vs US$ 14.7/bbl in FY 2022-23), gasoil 10-ppm cracks at US$ 23.0/bbl (vs US$ 40.7/bbl), and jet/kerosene cracks at US$ 21.2/bbl (vs US$ 32.9/bbl). RIL’s strategic positioning and efficient operations ensured stability, exemplifying resilience and adaptability amidst market complexities.

Jio-bp, the joint venture of RIL and bp, expanded its mobility station network to 1,729, offering pioneering benefits, including up to 4.3% extra HSD mileage per liter, trucker loyalty and on-demand doorstep HSD. Backed by world standard operations, Jio-bp achieved 63% increase in ATF sales.

With over 4,500 charge points at EV-friendly locations backed by innovative solutions and foray into CBG retailing, Jio-bp has also strengthened its low carbon fuel portfolio.

Polymers and Elastomers

Polymer prices weakened during FY 2023-24 due to global capacity additions and slowdown in consumption amidst recessionary concerns in developed markets. Polymer margins contracted during the year with PP-Naphtha, HDPE- Naphtha and PVC margins down by 13%, 8% and 21%, respectively. US Ethane prices decreased by 48% and Asian Naphtha prices dropped by 11% Y-o-Y.

RIL Cracker feed-mix was optimised based on Naphtha Vs Ethane economics and lower Ethane prices supported chemical margins.

Intermediates and Polyesters

In FY 2023-24, PX-Naphtha margins increased by 10%, surpassing the five-year average of US$ 303/ MT. Integrated producers like RIL continued to optimise production based on PX vs. gasoline economics. PTA-PX margins decreased by 14% due to tight PX supply and significant capacity expansions of PTA in China. MEG-Naphtha margin surged 53% to US$ 67/MT, driven by increased downstream operations and weaker naphtha prices. However, margins continue to remain weak due to capacity overhang and higher inventory.

PET margins weakened due to a substantial capacity increase in China and sluggish demand growth in Western countries attributed to high inflation. Filament and Staple margins were constrained by significant capacity expansions in China and subdued global market demand.

Outlook

Global oil demand is expected to grow steadily, supported by Asian markets, particularly China and India. Middle East and Africa’s new refining capacities are likely to stabilise supply, balancing the market. Firm oil prices and product cracks are anticipated as global trade flows stabilise post disruption caused by Russian-Ukraine conflict. Geopolitical tensions in the Middle East, Russia-Ukraine conflicts and Election cycles in major economies may alter oil market dynamics. India demand is expected to remain robust in line with heavy economic activity.

Polymer demand in India is expected to rise by 6-8% in FY 2024-25, driven by construction, automotive, packaging, and consumer goods sectors. Polyester growth remains strong, supported by domestic demand resilience. Exports from India are expected to increase with global demand recovery, boosting capacity utilisation.