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BP to Capitalize on India's Fuel Market With $1B Investment

Zacks Equity Research

BP plc BP announced the payment of $1 billion to Reliance Industries (“RIL”) for a 49% stake in Reliance BP Mobility Limited (“RBML”) – a joint venture (JV) with RIL holding the remaining 51%.

The transaction marked the completion of the initial agreement entered by the companies on Aug 6, 2019. With the investment, the British Energy giant will capitalize on fast-growing fuels and mobility markets of India to become a leading player in the country. BP said that it will now be able to leverage the wide customer networks of RIL in India through the Jio digital platform.   

BP says that through the next two decades, it expects India to be the world’s fastest-growing fuel market. The integrated energy major added that India will likely see its number of passenger cars increase six-fold over the period. Thus, in order to keep pace with the mounting fuel demand, the JV is planning to boost the number of fuel retailing stations to 5,500 from 1,400 over the next five years.

BP also plans to invest in India's green energy fund. On Jul 7, the company announced plans to invest $70 million in Green Growth Equity Fund (GGEF) of India. The fund, being promoted by the India’s National Investment and Infrastructure Fund (NIIF) and the government of U.K., was established in 2018.

Notably, after the completion of the investment, India’s GGEF will be more focused to scale up growth in zero carbon and low carbon energy solutions in the nation. Importantly, the investment is not only going to aid India in significantly lowering greenhouse gas emissions but will also create a platform for the British energy major to invest alongside GGEF in many low-carbon projects in the country that are commercially viable. The investment will also make BP a limited partner in GGEF and enable the company to represent on the advisory committee.

The fund, comprising investments from the governments of India and the U.K., has a target to reach of roughly $700 million in investment commitments. Overall, with the investment strategy, BP is not only committed to reimagining energy for India but will also advance to become a net zero emission company by 2050 or sooner.

BP is not the only company investing in non-oil businesses like renewable energy to align goals with the Paris Climate Agreement. Royal Dutch Shell plc RDS.A is another key energy firm planning to become a net zero emission energy firm by 2050. Eni SpA E is also committed to renewables for a cleaner future.

BP p.l.c. Price

BP p.l.c. Price
BP p.l.c. Price

BP p.l.c. price | BP p.l.c. Quote

BP currently carries a Zacks Rank #3 (Hold). Meanwhile, a better-ranked player in the energy space is Murphy USA Inc. MUSA. The stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Murphy USA is likely to see earnings growth of 7% in the next five years.

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Eni SpA (E) : Free Stock Analysis Report
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