Reliance Bids For LyondellBasell

India’s Reliance Industries has submitted an offer to buy a controlling interest in the bankrupt petrochemical firm LyondellBasell Industries.

Buying Lyondell would instantly make Reliance one of the top five chemical companies in the world. Lyondell had 2008 sales of more than $50 billion, and Reliance had $29 billion in its most recent fiscal year.

Lyondell is one of the world’s largest makers of polyolefins. Reliance, the world’s largest polyester producer, also makes polypropylene and other petrochemicals. Other Reliance businesses include oil and gas exploration, refining, and retail stores.

In its statement, the Indian conglomerate cautioned that the bid—for up to $12 billion, according to published reports—is preliminary.

In a report on the possible deal, Ivan Palacios, a Singapore-based analyst for the bond-rating agency Moody’s, noted that Reliance has about $4.2 billion in cash and liquid investment on its balance sheet, plus $8 billion in its own stock. “These could provide the company with significant resources to fund a potential deal,” he wrote.

Lyondell is taking the offer in stride. The company says it is focusing on the bankruptcy process, which began in January when it filed for Chapter 11 under the weight of its huge debt and a bad economy.

Under Lyondell’s reorganization plan, filed in September, some creditors will get equity in a new company, which eventually could be listed on the New York Stock Exchange. Lyondell is owned by New York City-based holding company Access Industries and Germany’s ProChemie Holding.

Others have made overtures for Lyondell, says David Harpole, a spokesman for the firm. “There are a number of parties that are interested in the company,” he says. “The Reliance offer is one more in that group.”

This isn’t the first time that Reliance has eyed a big purchase. At a 2004 press conference, Chairman Mu­kesh Ambani said he was interested in buying Basell from then-owners BASF and Shell Chemicals. Media reports swirled in 2007 about a global petrochemical joint venture with Dow Chemical. And Reliance was reportedly interested in GE Plastics, which was later sold to Saudi Basic Industries Co.