RIL hives off overseas oil projects

Reliance Industries has hived off its overseas oil and gas projects into a separate wholly-owned company based in Dubai and is eyeing a tie-up with ONGC Videsh to jointly bid for oil and gas opportunities abroad.

Reliance Exploration and Production DMCC has been formed with Mukesh Ambani as its chairman, industry sources said. The company's interest in a discovered oil block in Yemen and in an offshore exploration block in Oman, besides exploration projects in northern Iraq, East Timor and Columbia will be transferred to the new company.

The Dubai-based firm has been modelled on lines of ONGC Videsh, which is a fully owned overseas investment subsidiary of state-run Oil and Natural Gas Corp (ONGC).

"Reliance has realised that it needs to delink assets in politically risk-prone areas from its balance sheet. Besides, it also makes business sense because every time they brought home seismic data of any overseas assets for processing, they paid 12 per cent customs duty," a source said.

The source said, "It is keen on bidding together for major opportunities with OVL. OVL, which has presence in 15 countries and has well-known tie-ups like the one with Mittal Steel for overseas oil asset acquisitions, has earned itself a reputation as a serious player. Reliance is a conservative player and would rather like to share risks with OVL."

Reliance spokesperson was not immediately available for comments.The company is looking at opportunities in Africa, Latin America and West Asia.

The Mukesh Ambani-run Reliance Industries is keen on acquiring gas fields in the Central Asian region and West Asia.

"It wants to bring the gas in its liquefied form (LNG) to a terminal on the west coast," the source said.

Reliance Industries has interests in one exploration block each in Yemen and Oman. Oil has been discovered in onshore Malik-9 block in Yemen and development plan for the block has been approved by the Yemeni government and test production commenced in December 2005, according to the company website.

In the Oman offshore block where RIL is the operator, the existing seismic data has been collected and 2D reprocessing of data is underway.

The company has also signed a technical evaluation agreement with ANH (Columbia's hydrocarbon regulator) and also entered into a cooperation agreement with Ecopetrol (national Oil Co of Columbia) for farm-in opportunities in that country.