MUMBAI: Reliance Industries (RIL) will finance its first new US oil refining project in 50 years, marking one of its biggest overseas bets and its return to the US energy market after four years.America First Refining (AFR), the startup developing the refinery at the Port of Brownsville in Texas, said it has received an offer “A nine-figure investment from a major global company at a 10-figure valuation” In February, but did not mention the name of the investor. “For the first time in half a century, the United States intends to build a new refinery designed specifically for American shale oil.” said AFR President and Founder John Calce.US President Donald Trump announced the refinery project on his social media platform Truth Social, naming RIL as an investor and inviting investment by India’s largest private energy company. “enormous”.
The announcement comes after RIL exits the US shale oil and gas exploration business in 2021.It is expected that construction of the shale oil refinery with a capacity of 168 thousand barrels per day will begin in the second quarter of this year.
“An opportunity for Indian companies to enter the American refining system”AFR also said that “the same major global company” had signed a 20-year agreement to buy the refinery’s output.The project is also expected to help narrow India’s trade surplus with the United States, an issue that has long been a concern for Trump.
“This is a historic deal worth $300 billion, the largest in the history of the United States,” Trump’s post on Truth Social said.According to the AFR, this figure reflects a long-term takeover arrangement under which the global major will buy 1.2 billion barrels of shale oil worth $125 billion and 50 billion gallons of refined petroleum products such as gasoline, diesel and jet fuel worth about $175 billion. She added that these transactions are expected to collectively improve the US trade balance by $300 billion.Analysts noted that the actual equity investment in the refinery itself is described as a “nine-figure” amount, implying several hundred million dollars, while the project valuation is in the “ten-figure” range, suggesting that the capital commitment is likely to remain below $1 billion.The Texas refinery will mark RIL’s second investment outside India. In 2021, the company announced a partnership with Abu Dhabi National Oil Company (ADNOC) to build a $2 billion petrochemical plant in the UAE.Industry experts say the project could deepen economic cooperation between India and the United States. MS Bennani, joint managing director of Axiom Gas Engineering, a gas station developer, said Texas is one of the world’s most important energy hubs, hosting major companies such as ExxonMobil, Chevron, Shell and BP.“Establishing a refinery there provides direct access to crude supplies and one of the largest fuel markets in the world,” Al-Banani said.
“RIL has extensive experience in processing heavy and sour crude at its Jamnagar refinery complex, giving it a strong technical advantage in refining diverse crude grades, including those available from regions such as Venezuela.”From a business perspective, the investment represents an opportunity for an Indian company to enter the US refining ecosystem and potentially expand into fuel distribution and retail in the future, Banani added.“It reflects the growing global presence of Indian industry and the strengthening of the India-US strategic partnership.”This development coincides with the volatility of global oil prices due to the growing conflict in West Asia. However, the announcement had little impact on RIL shares. At the end of trading, the stock fell 1.3% to Rs 1,391 on the BSE. RIL did not comment on this announcement.
