RIL in talks for two oil blocks in Peru

Reliance Industries (RIL), which is set to begin production from the country's largest gas block, is in talks with Peru for picking up stake in two oil blocks.

According to sources, RIL has completed the negotiations for the two oil blocks for which contracts are likely to be signed soon. The names of the blocks and the amount of stake that RIL is likely to pick up are not known.

The talks come after RIL signed a memorandum of understanding with Peru's national oil company Petroperu for collaboration in the oil and gas sector earlier this year.

The agreement with the Peruvian company involves co-operation in exploration and production, besides forming joint ventures for setting up petrochemical plants.

An RIL spokesperson declined to comment.

RIL, the Mukesh Ambani-promoted company, is also looking at setting up a refinery in Central America.

The company is considering a bid for building a 350,000 barrels a day oil refinery in one of the Central American countries of Costa Rica, Guatemala, Honduras and Panama.

RIL already operates a 660,000 barrels a day refinery at Jamnagar, Gujarat. Another 580,000 barrels a day refinery is being constructed by its subsidiary Reliance Petroleum close to the existing refinery.

"Central America is coming up with a refinery. Then there are refineries in the US and RIL's own refinery in Gujarat. Demand for crude oil is continuously rising. RIL has a very good track record for finding oil and gas. It makes sense to buy into exploration assets wherever there is an opportunity," a source said.

Moreover, with crude oil prices hitting record levels of $90 a barrel recently, and still remaining strong at around the $88 a barrel mark, it is worth taking the risks involved with exploration, a Mumbai-based analyst said.

Operators of oil and gas blocks commonly sell stake in blocks to other companies in order to share the risks involved. RIL has discovered oil or gas in 31 of the 50 wells it has drilled so far in India, could propel RIL to picking up the stake in the Peru oil blocks.

RIL already has 11 overseas oil and gas assets, with the most recent being a block in Australia. The company is looking at buying into exploration and producing blocks in Africa, Latin America and West Asia.

RIL also has two blocks in Iraq, three in Yemen (of which one is producing oil), one in East Timor, and two each in Oman and Colombia.

It is also reported that RIL is also talking with the government-owned Indian Oil Corporation (IOC) for acquiring assets overseas.