Chevron says evaluating options on Reliance Petroleum's stake

Chevron owns 5 percent in Reliance Petroleum and has an option to raise its holding to 29 percent.

Analysts say the U.S. major may review its plans for the option after Reliance Industries sold 4 percent for $1.0 billion last week, lowering its stake to 71 percent.

"Chevron continues to evaluate our options with our ownership in Reliance Petroleum. We will provide specific project updates when definitive decisions are made," a Chevron spokeswoman for its Asian operations said in an e-mailed response to Reuters.

Reliance Petroleum is building a 580,000 barrels per day (bpd) refinery in the western state of Gujarat, adjacent to its parent Reliance Industries' existing 660,000 bpd refinery.

Shares in Reliance Petroleum, valued at about $24 billion, are now trading at more than Rs.200, or about 3.5 times their initial public offer in April 2006 at Rs.60.

Chevron had bought its 5 percent holding at the IPO price for $300 million.

"We believe that Reliance Petroleum's rich valuation and the fact that Reliance sold a 4 percent stake to the market, may imply a possible future Chevron exit unless there is meaningful pullback in the market," Goldman Sachs said in a note on Monday.

Shares in Reliance Petroleum ended down fell 2.6 percent at Rs.204.05 in a Mumbai market that rose 2 percent.

The stock had hit a lifehigh of Rs.295 on Nov. 1, on speculation Chevron may increase its stake in the company, but the rise in prices was a deterrent for the U.S. firm to raise its stake, analysts said.