Mukesh Ambani bullish on gas sector

INDIA ECONOMIC SUMMIT 2006

Natural gas will be a significant contributor to Reliance Industries' revenues and profits by 2010, says the head of India's leading company.

The head of India's leading company, Mukesh Ambani, was extremely bullish about the Indian economy"" "India has the potential and will grow at double digit rates""" and about the prospects of his own company, Reliance Industries Limited (RIL), especially in the gas sector, when he spoke at the Summit on Monday.

RIL has recently discovered huge reserves of gas in the Krishna-Godavari Basin, estimated at 11.3 trillion cubic feet, which are slated to produce 80 million metric standard cubic metres per day (mmscmd). This estimate is widely expected to be revised upwards.

"Continuously, we are finding more gas," he said. The company has managed 25 discoveries in the 30-33 wells that it has dug, he said.

"To my mind, having natural gas in the long run is much more competitive because you can always buy oil and bring it in. It is always much more difficult to transport natural gas," Ambani told Business Standard on the sidelines of the summit.

He said that gas would be a "significant" contributor to the company's revenues and profits by 2009-10. "It will then make a significant difference to our bottomline," he said.

About 20 million households are expected to have access to natural gas by 2010-11. In fact, gas is expected to account for 25 per cent of total hydrocarbon consumption in the next 20 years, against 8-9 per cent today.

"Finding more natural gas is good for the country as a whole, and hopefully in coming decades, it will make indian economy stronger," Ambani said.

Gas discoveries are also expected to reduce the government's subsidy bill on LPG. The average household's expenditure on cooking would be cut by a third with the use of natural gas, even compared to the current subsidised prices, he said.

He also said that work on the new refinery at Jamnagar was "on track" for completion by the second half of 2008. The company already operates the world's third largest refinery at Jamnagar, with a capacity of 660,000 barrels per day.

The refinery is producing the most advanced products"" Euro V- and Euro VI-compliant- "" that are reaching California, among other places.

On bio-fuels, he expected "huge progress" in the next three-to-five years, as genetically modifed seeds with increased oil become common.

Complimenting the government for the "finest" policies in the upstream sector of exploration, he said that the energy demand in India is also expected to grow multi-fold.