Reliance Shares Rise After Long-Term Green Ammonia Agreement

Reliance Industries Ltd. stock edged higher on Tuesday, 17 March, after the company said it had entered into a long-term agreement with Samsung C&T to supply green ammonia.

The company disclosed in a filing that the agreement is valued at more than $3 billion and will run for 15 years.

Supplies are expected to begin in the second half of FY29. The deal is among the larger long-term arrangements of its kind and reflects growing global interest in cleaner fuels.

Countries such as South Korea and Japan have been looking for alternatives to conventional fuels as they try to bring down emissions from power generation and heavy industry.

Reliance Industries shares closed at ₹1400 on 17 March at the National Stock Exchange (NSE).

What Does The Deal Mean For Reliance?

Green ammonia is produced by combining nitrogen with hydrogen generated by using renewable electricity.

Besides being considered a low-carbon fuel, it is also a highly effective medium for storing and transporting hydrogen.

For Reliance, the contract provides a degree of future demand visibility as it expands capacity in the area. A buyer, on the other hand, will have a regular supply for a long haul.

The company is working to establish a manufacturing system mainly for clean energy products like solar modules, battery energy storage systems, and electrolysers.

How Does This Fit Into Its Long-Term Plans?

Reliance has been slowly moving its attention to other avenues apart from its conventional oil-to-chemicals business.

Back then in 2021, it had revealed its investment plan to pump in $10 billion in renewable energy and allied segments.

Long-term supply deals can help companies plan capacity with more certainty. They also reduce the risk of demand fluctuations, especially in a relatively new market like green ammonia.

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What Can Investors Expect Next?

The next few years will be important from an execution point of view. Investors are likely to track how the company builds its production capacity and whether it signs more such agreements.

Progress on its clean energy projects, timelines for commissioning facilities and overall capital spending will remain key factors.

While the benefits of this deal will take time to reflect in earnings, developments in the new energy segment could shape how the market looks at the company’s future growth.

Sources:

CNBC TV18

ET