Reliance Petroleum refinery implementation achieves all-round progress

Reliance Petroleum Ltd on October 19, 2006, has announced that the Company has achieved impressive all-round progress in implementation of its refinery at Jamnagar and is progressing well towards scheduled completion by December 2008.

During the quarter, the Company has made rapid strides on the financing front. Following its initial public offering that created several new records during the last quarter, the Company has successfully obtained commitments of Syndicated Foreign Currency Loan facilities of US$ 1.5 billion and US$500 million, which together is the largest foreign currency financing for any single project from India. In a well executed global syndication, the Company secured commitments of over US$ 3.4 billion from over 50 banks across three continents. This reflects an oversubscription of 2.3 times its initial loan facility of US$ 1.5bn. The Company has utilized a part of the excess demand by launching an additional loan facility of US$500 million, towards meeting a part of the balance debt requirements for the Project. The work on balance funding is progressing satisfactorily.

The Company achieved yet another important milestone during the quarter by securing all the required land for the project. The Company has now secured the entire land of 1,700 acres at Jamnagar in Gujarat.

Meanwhile, the Company has achieved significant progress on various aspects of the project implementation, including engineering, procurement and construction. The project implementation highlights for the quarter are as follows:

- Basic engineering completed and nearly 50% of detailed engineering completed.
- More than 7,500 engineers are working on the project, across locations globally.
- All long lead and critical equipments ordered; Major construction contracts awarded.
- Civil and piping works have progressed rapidly.

During the quarter, the Company clocked substantial progress on the engineering front. While basic engineering is completed, detailed engineering is well on its way to completion. Project activities are being conducted across the globe at various locations, including London, Paris, Montreal, Toronto, Houston, Shanghai, Jamnagar, Mumbai and Delhi. All these locations are seamlessly connected to deliver world class engineering output.

Equally impressive progress has been achieved on the procurement front. The Company has placed orders for all long-lead and critical equipments, over dimensional equipments as well as major bulk items. Shop capacities have been blocked in advance for balance commitments. Nearly 75% of procurement commitments and contracting activities have been completed and substantial deliveries of various bulk items have also begun at site.

The Project has transitioned from its engineering phase to the construction phase successfully during the quarter. Over 230,000 cubic meters of concreting has already been completed and over 100,000 cubic meters of concrete (equivalent to several sky scrappers) is being poured every month. The fabrication of steel structures and tankages is making rapid progress. The Company has developed sufficient site infrastructure to put construction on the fast track and is now equipped to receive a peak workforce of over 100,000 people.

Looking beyond, the global refining fundamentals remain intact and promise exciting value creation opportunity for complex refineries. The continuing shortage of global, refining capacities coupled with tightening product specification, slow growth in desulphurization capacities and widening light heavy differentials is expected to result in widening demand supply gap for transportation fuels globally. Buoyant outlook for the global economy augurs well for petroleum products demand and reinforces confidence on the long term prospects for the sector.

Commenting on the progress Mr Mukesh Ambani, Chairman of the Company said "I am pleased with the progress achieved by the RPL team on various fronts, including the financial closure and project implementation. The construction activities have taken off smoothly and the project is well on its way towards timely completion. I am convinced that RPL is well positioned to capitalise on the emerging opportunities and create superior value for its shareholders".

Source : Equity Bulls

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