RIL, Chevron likely to strike deal on KG basin assets soon

MUMBAI: Reliance Industries (RIL) is likely to strike a deal soon with US based Chevron on the D-6 block in the Krishna Godavari (KG) basin, sources said. Chevron CEO David O’Reilly and RIL CMD Mukesh Ambani may meet later this week in Mumbai. Mr O’Reilly, along with Chevron’s global refining president Jeet Singh Bindra, is likely to visit India for four days starting Tuesday.

Sources said the major issues during the meet will include Chevron’s participation in developing the D-6 block, where RIL is an operator with a 90% stake. According to RIL’s partner Niko Resources, (which owns 10% stake in the block), the block has in place reserves of 35.4 trillion cubic feet (TCF).

It is believed that RIL and Chevron will also set up a JV for city gas distribution (CGD) projects. RIL has already sought the government’s approval for taking up CGD projects in Maharashtra, Andra Pradesh, West Bengal, Tamil Nadu, Gujarat and Karnataka, amongst others.

The RIL spokesperson declined to comment over the issue, while Chevron officials could not be reached. Last year, Chevron partnered RIL as co-promoter of Reliance Petroleum (RPL), a start up company to own and operate a 27-MMTPA export oriented refinery project in the Jamnagar SEZ. Chevron had bought 5% stake for $300 million with future rights to purchase additional shares to take its equity to 29%.

While picking up 5% stake in RPL, Mr O’Reilly had said, “We are very pleased to have forged this relationship with Reliance, one of India’s leading companies, which has excelled in the execution of world class projects. This underscores the importance of Asia to Chevron generally, and India specifically. I look forward to working with Reliance in the development of the new refinery and jointly pursuing additional opportunities.”

Chevron has already signed two memoranda of understanding (MoU) with RIL. The scope of the MoUs covers the principles by which RIL and Chevron will seek to optimise refinery crude supply and product marketing, and sets the intent of both companies to pursue other collaboration opportunities in the energy value chain. RPL elected Jeet Bindra to its board of directors effective July 21, 2006 and David C Reeves, president of Chevron Global Supply and Trading, was named an alternate representative to the RPL board.