Reliance Industries Ltd. plans to sign an MOU with GAIL (India) Ltd. In an unprecedented move, RIL seems to be inducting a new partner in its core business: petrochemicals. The MoU with GAIL (India) Ltd will be for jointly setting up petrochemical projects abroad and marketing their domestic output in the country. The joint partnership is guided by the fundamental belief in the great upside to the plastics business with huge global potential.
The MOU will come up for ratification at GAIL's Board meeting on Friday. According to the MOU that will be valid for three years, the two will explore opportunities to set up petrochem projects in gas-rich nations. The countries identified include: Russia, the former Soviet Union states and Qatar. Since GAIL has cordial relations with these countries, setting up petrochem projects at gas-head will definitely be advantageous. The two partners will float a special purpose vehicle (SPV) company where both will hold equal equity for each activity, including projects abroad.
The two companies plan to broaden their sales coverage, including product swapping as part of the marketing tie-up.