Chevron plans overseas venture stakes for RIL

Move aimed at increasing US major's refining flexibility & scale.

The alliance between Chevron Corporation and Reliance Industries is set to go global. The US energy major is open to offering equity stakes to Reliance Industries in oil and gas exploration and production ventures abroad. Chevron may also join hands with Reliance for refining and marketing in the Asia-Pacific region.

In an e-mail response to Business Standard, a Chevron spokesperson in the US said the company "will consider a joint venture outside India and giving stake to RIL on a case-by-case basis as part of the broader collaboration contemplated between Chevron and RIL".

This comes close on the heels of Chevron's acquisition of 5 per cent in Reliance Petroleum for Rs 1,320 crore. The company reserves the right to scale up its holding in Reliance Petroleum to 29 per cent within three months of the commissioning of the plant or April 2009, whichever is earlier. Reliance Petroleum plans to commission the project by August 2008.

Among its overseas operations, Reliance has exploration rights to one of the large deepwater blocks in the Sultanate of Oman. In addition, it has a 25 per cent stake in an exploration block in Yemen, which has struck oil.

Reliance is looking to expand its overseas ventures aggressively in Yemen, Sudan and Colombia. It was hoping to enter these potentially huge markets with the technology might of Chevron, industry sources said. The company is also looking to increase its share of the E&P business to 30 per cent of total turnover from 3 per cent now.

For Chevron also, it is a win-win situation as it can use Reliance's superb world-class execution skills. Following the acquisition of energy major Unocal last year, Chevron became the largest resource holder among publicly traded companies in the the Asia-Pacific region with leading upstream positions in Thailand and Indonesia.

"Right now, about 60 per cent of Chevron's refining capacity is located in Asia-Pacific and on the North American West Coast "" two of the fastest growing energy markets in the world," said the company spokesperson.

"One major aspect of our downstream strategy is to increase our refining flexibility and scale to meet growing global demand. One of the great advantages of the new Jamnagar refinery will be its ability to refine a wide variety of crudes, including heavy and sour," she added.

Chevron already supplies heavier crudes to the existing Jamnagar refinery. The agreement for the new refinery intends that the two companies will work together to optimise the sourcing of crude oil for the new refinery, with Chevron being responsible for a portion of the crude oil supply.