BP Invests $1B In Fuels Joint Venture With Reliance In India

BP PLC (BP) has entered into a $1 billion joint venture with Reliance Industries Ltd. to set up operations in India’s fuels and mobility markets and meet the fast-growing demand for energy in the country.

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Under the terms of the venture, BP has paid Reliance $1 billion for a 49% stake in the joint venture and Reliance will hold the remainder 51%. Operating under the Jio-bp brand, the partnership will expand Reliance’s current 1,400 fuel retail sites to up to 5,500 over the next five years. Jio-bp will also boost its presence from 30 to 45 airports and increase the staff employed in fuel service stations from 20,000 to 80,000 over the next five years.

India “is a country that will require more energy for its economic growth and, as it prospers, its needs for mobility and convenience will accelerate,” BP CEO Bernard Looney said. “This new venture is a unique opportunity to build a leading, fast-growing business that can help meet India’s demands and create exciting new digital and low-carbon options for the future.”

The partnership seeks to provide Indian consumers with advanced fuels with lower emissions, electric vehicle charging and other low carbon solutions over time.

India is expected to be the fastest-growing fuels market in the world over the next 20 years, with the number of passenger cars in the country estimated to grow almost six-fold over the period.

Shares in BP have lost 42% of their value this year as the coronavirus pandemic pushed oil prices to multi-year lows leading to declines in oil and gas output. The stock depreciated 4.7% to $22.08 in early afternoon U.S. trading.

Meanwhile, five-star analyst Sam Margolin at Wolfe Research last month raised BP’s rating to Buy from Hold with a price target of $31, up from $29, saying that the company has “a credible pathway” to deleveraging and dividend coverage in 2021.

Overall, Wall Street analysts share Margolin’s bullish outlook on the stock. The Strong Buy consensus shows 3 Buy ratings versus 1 Hold rating. The $29.67 average price target implies a 34% gain in the shares over the coming 12 months. (See BP stock analysis on TipRanks).