RIL to raise $2 bn via 10-year loan

Reliance Industries, the country's largest private sector company, is raising $2 billion through a 10-year overseas syndicated loan for funding its oil and gas exploration in the D6 block of the Krishna-Godawari basin, according to Vineyesh Sawhney, the company's vice-president, finance.

"We have been able to get a cheaper rate of Libor (London inter-bank offered rate) plus mid-60s basis points for the syndicated loan. This is cheaper than what we may have received if we had tapped the US bonds market," Sawhney told Business Standard, on the sidelines of the IFR Conference here.

The D6 was among the blocks awarded to a consortium of Reliance Industries (90 per cent) and NIKO (10 per cent) under the NELP I round of bidding. Currently, the JV is developing India's first deep water gas production facility for the Dhirubhai 1 and 3 fields, targeting the first gas in the second half of 2008.

The $2 billion syndicated loan is arranged by a consortium of 14 banks including Citigroup, ABN-Amro, Standard Chartered, HSBC, ICICI Bank and DBS. The full commitment by banks for the loan is expected to be completed this week, said industry sources.

On future borrowing programme, Sawhney said the company had enough resources to meet further funding programme. "We are comfortable with the resources we have," he said adding that the company did not foresee any immediate requirement for more funds.

A recent report on Reliance Industries by Australian brokerage Macquarie said the best was yet to come from the D6 block, which had a total acreage of 7,645 sq km.

Each individual well in the D6 block could produce at the rate of 500 mcf/d, doubling India's current gas production of 2.8 bcf/d, the Macquarie analysts wrote in the report.

Reliance Industries posted a net profit of Rs 10,908 crore on a turnover of Rs1,10,886 crore in 2006-07.