Amazon Looks To Buy Into India’s Oil Boom

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By Irina Slav

Amazon is reportedly in talks to acquire a stake in Reliance Retail, the retail arm of the conglomerate and the largest retailer in India.

According to the Economic Times, the Big Tech major could snap as much as 26 percent of Reliance Retail as it seeks to establish itself in the Indian brick-and-mortar store industry, which is still the dominant way of retail.

The Indian conglomerate’s retail division, along with the telecoms business, helped it book a 7-percent increase in net profits for the first quarter of the company’s financial year, offsetting the worst oil refining margins at Reliance Petroleum for the last 18 quarters, according to Reuters.

Reliance operates the world’s largest refining complex, whose complexity index last month rose to 21.1 percent, meaning the Jamnagar facility can now process a wider range of crude oil grades, which should help improve margins. However, more expensive oil was bound to affect the conglomerate’s refining business, and India sources most of the oil it uses from abroad.

In financial 2018/2019, Reliance’s refining margin averaged US$9.20 per barrel, which was considered relatively strong as it was substantially higher than the benchmark Singapore complex margin of US$4.30 a barrel. Still, persistently higher oil prices have clearly affected margins unfavorably.

Reliance has refining capacity of a total 68.2 million tons of crude, which makes it India’s second-largest refiner behind state-owned Indian Oil Corp.

In the context of hurt refining margins, a deal with Amazon could probably strengthen one of Reliance’s top-performing divisions until refining gets back on its feet. While Amazon refused to comment on the report about deal talks, Reliance told the Economic Times “Our company evaluates various opportunities on an ongoing basis. We have made and will continue to make necessary disclosures in compliance with our obligations under Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and our agreements with the stock exchanges.”

Crude Oil

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