Essar, Reliance to share fuel products, facilities

Private sector integrated oil majors and archrivals, Essar and Reliance, have come together to lift themselves out of the loss-making oil retailing business. The two companies have entered into a product exchange agreement that allows them to exchange petroleum products like petrol and diesel fuel without direct selling or buying. Recently, Reliance curbed its petroleum retail business to dodge losses on account of spiraling crude oil prices and subsidized public sector sales, while Essar was forced to open up pumps ahead of its new refinery going full stream in March 2007. For the western Indian retail market, EOL has inked a product exchange agreement with MRPL refinery, which will supply petrol and diesel fuel to JNPT and Mundra. For the rest of India, the company will use Reliance’s infrastructure. This also means that the companies will discuss plans on the location of a new storage facility to avoid duplicity. The public sector undertakings, who together supply close to 80% of total domestic demand, have not tied up with any private player for any product exchange or hospitality agreement. (December 21, 2006)