Chevron seen to acquire stake in RIL's new oil & gas co

MUMBAI: Reliance Industries (RIL) is looking to hive off its oil & gas assets in the Krishna-Godavari basin into a separate company and offer a stake to a foreign partner. US oil major Chevron, which already has a stake in Reliance Petroleum, is considered the frontrunner, sources familiar with the matter said. Chevron has a MoU in place to further collaborate in upstream and downstream sector. RIL had earlier held discussions with BP and BG Group for diluting stake in the block, but the talks fell through due to disagreements over the valuation.

The move is hugely significant as it would mean that RIL would become like a holding company for its most important upstream assets and focus on petroleum refining and petrochemicals.

The new company will control all RIL���s oil and gas blocks in the KG basin, including the famous KG D6 where India���s largest gas discovery was made in 2002. It would also own any oil or gas producing block held by RIL now.

RIL has already made a company called Reliance Exploration and Production DMCC its subsidiary in the third quarter. It is not known if this will be the vehicle for the upstream assets, but the fact that this development has happened now is significant.

RIL���s board of directors in November approved a proposal to raise $2 billion for the oil & gas exploration and production (E&P) business. The company has already invested a substantial amount for developing the block and would raise more funds by diluting stake to the international partner and the Indian public.