RIL eager to expand E&P globally

Reliance Industries Limited (RIL) is planning to expand its oil exploration and production (E&P) footprint globally, and the company is in discussions with four global players for partnerships to explore new regions in the US, South America and West Asia.

The company aims to set up country specific ventures to acquire assets in multiple geographies, whether in the US, West Asia and South America.

"Some top merchant bankers are already involved in the discussions," sources said. Plans and investment terms have not yet been finalised.

RIL has more than 4,25,000 sq km of acreage globally, 3,40,000 sq km of this is in India and the remaining in Oman, Yemen, Colombia, East Timor, northern Iraq and Australia.

"Going forward, RIL may separate the E&P business as a standalone division or as a subsidiary like Reliance Petroleum Limited (RPL) which would spearhead the joint ventures," the sources said.

RIL executives would not comment on the matter.

RIL joined hands with Canada's Niko Resources (10 per cent stake) for exploring the D-6 block in the Krishna-Godavari (KG) basin and discovered gas in the block.

It has a similar alliance with Hardy Oil and Gas Plc for D-3 and D-9 blocks in KG basin. The company was also in talks with Chevron Corporation to jointly explore the deepwater basins in India, top executives said a few months ago.

The sources said RIL has ambitious plans to produce 10 billion barrels of oil equivalent of 2P gross reserves (in industry parlance this is a 50:50 probability to find gas or oil) globally by 2011-12. This would translate into a value of over $800 billion at the current price of $80 a barrel.

RIL Chairman Mukesh Ambani told shareholders on Friday that oil and gas exploration would fundamentally transform Reliance's earnings growth profile and that the company was on the threshold of unprecedented value creation.

He said RIL had invested over $2 billion in exploration and production and that it was committed to invest about $4 billion of risk capital to realise the hydrocarbon potential in India.

So far, RIL has made discoveries of 4.4 billion barrels of oil equivalent in the last seven years with an overall success rate of about 60 per cent, which makes it one the most successful deepwater exploration companies and puts it among the top 20 private upstream players globally.