MUMBAI (NewsRise) -- Reliance Industries signed a definitive agreement with British energy major BP to form a joint venture that will expand the Indian conglomerate's fuel retail network by four times over the next five years.
The new venture -- Jio-BP -- will expand Reliance's current network of retail outlets and aviation fuel stations across India to up to 5,500 and 45, respectively, over the next five years, both the companies said in a statement. Reliance currently has 1,400 fuel retail sites and 30 aviation fuel stations.
The two companies had, in August, forged the partnership in a bid to tap into the booming energy demands of Asia's third-largest economy.
India is expected to account for a quarter of the world's energy needs by 2040, according to the International Energy Agency. Global fuel retailing giants such as Royal Dutch Shell and Russia's Rosneft have already found a presence in the south Asian country to tap into this demand.
Reliance, operator of the world's largest refinery complex, holds a 51% stake in the new venture with BP holding the rest. The venture is likely to be formed in the first half of 2020.
"India is one of the world's most important energy markets -- its transport and aviation sectors are growing and evolving rapidly," said Bob Dudley, group chief executive of BP. "We aim to meet the country's growing demand for mobility solutions, high-quality fuels and services through this new venture."
BP already has a partnership with Reliance through which it owns a 30% stake in some of the Indian company's exploration blocks. In 2017, the two tied up again to form a venture that works on alternative fuels and mobility businesses.
The British company has in the past expressed interest in state-owned Bharat Petroleum, a fuel retailing company that the government put up for sale earlier this year. The government is looking to sell more than 53% stake it owns in the company, the second largest state-owned refining and marketing company.
In October, Dudely said the company is waiting to see "what is on offer," from the government, the Press Trust of India had reported.
Analysts have touted Reliance as a serious contender for Bharat Petroleum, even as the Mumbai-based company sought to sell a part of its stake in refining and chemicals earlier this year to become a zero-debt company. Reliance's billionaire Chairman Mukesh Ambani had, in August, agreed to sell a 20% stake in its oil-to-chemicals business to Saudi Aramco.
A prospective acquisition of Bharat Petroleum will not only give Reliance 34 million tons in additional refining capacity, but also access to about 25% share of India's fuel marketing, Nomura said then.
The state-owned company's nearly 15,000 fuel outlets "would be attractive and provide synergies to Reliance's consumer businesses," Nomura said.
Shares of Reliance lost 0.3% in Mumbai trading on Tuesday, while the benchmark S&P BSE Sensex gained 1%.
--Dhanya Ann Thoppil