Why Reliance Is Interested In Vci?

By Author: Mike Smith
Total Articles: 103
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In a bid to acquire Canada based private company Value Creations Inc. (VCI), Reliance Industries Limited has submitted a $2 billion as a token of interest. Mukesh Ambani led RIL has been eyeing major prospects in the west for quite some time now to expand its reach and take on a global appeal. Following a long trail of economic downturn which galloped many organizations across the globe resulting in companies filing for bankruptcy or a tedious struggle to survive, Reliance Industries is now contemplating various acquisition opportunities, Value Creations being one of them.

The Canadian company Value Creation Inc. owns humungous bitumen rich oil sands assets. The acquisition could prove out to be very beneficial for RIL and could turn it into a major global energy giant. The fact that one of the VCI's branches, namely BA energy owns a patent for processing bitumen which is extracted from the oil sands has made the multimillion dollar deal a point of interest for all oil giants. In short Reliance Industries Limited has struck gold with VCI. As far as Petroleum sector is concerned, RIL has not been very lucky. However, getting ...
... hold of the company owning a bitumen processing patent would change the graph of RIL in petroleum sector to a great extent. Value Creation Inc. possesses a huge acreage but so does many other companies in the west. Many business analysts who have been closely following the deal are certain about the fact that the main reason behind Reliance's interest in VCI lies with the Bitumen patent that BA Energy owns.

Apparently with companies like PetroChina, one of the leading oil companies, contemplating the idea of taking over a company called Athabasca owning oil sands, the competition is going to be very stiff on the global scene. With USD 70 or 80 per barrel, oil sands are expected to work exponentially well. Besides, oil sands is an area where technology is improving at a very fast pace. Canada still has some areas of oil reserves however; due to lack of technology the reserves could not be unlocked. According to trade analysts, Canada still has a lot to offer the world as far as oil is concerned.

Value Creations (VCI) is a Canada based group which is the proud owner of one of the largest holdings of oil sands in the world. VCI owns a few billion dollars' assets. This Alberta based oil company has a capacity to extract 10,000 barrels of Bitumen every day with a production capacity of 8400 barrels of refined product. In November 2009, RIL had made a bid of $12 billion to acquire another bankrupt petrochemical firm LyondellBasell which is a unit of the New York based Access Industries Holdings. If both the deals are materialized, Reliance Industries Limited could be one of the leading global conglomerates in petrochemicals.

Both these oil majors LyondellBasell as well as Value Creation (VCI) hold the key to make Reliance Industries Limited a global oil conglomerate.

Mukesh Ambani led Reliance Industries, the flagship company of the Reliance Group, has submitted a $2 billion as a token of interest for acquiring VCI.