RIL to hive off offshore oil assets into new company
By Rajeev Jayaswal & Soma Banerjee, TNN |
Highlights
NEW DELHI: Reliance Industries (RIL), which has kicked off the countdown to its gas production from the KG basin, is now set to transfer all its overseas oil assets to a new company - Reliance Exploration and Production DMCC.
Headquartered in Dubai, the RIL subsidiary will first take over the assets RIL has secured in the West Asian countries.
Modelled on OVL, the investment arm for ONGC’s overseas oil assets, the new RIL subsidiary will be the holding company for all overseas upstream assets in oil and gas. This restructuring is being done to reduce the risks on RIL’s balance sheet as many of these oil assets are in politically risk-prone areas.
RIL, which had confined itself mainly to exploration and production within India, has now taken up overseas expansion in a major way. Armed with its success in the Krishna Godavari deepwaters (KG basin), the company has been looking at opportunities in oil-rich nations including Russia and Central Asian countries. As is the case, most of the new oil assets and opportunities are increasingly being offered in countries facing political turmoil. A recent case is the oil block in Iraq which RIL and OVL are taking up jointly.
“The political risks in these countries are huge and exposing RIL to such uncertainties could impact valuations,” said an analyst. The subsidiary was floated in the third quarter of 2006-07.
RIL has interests in exploration of overseas blocks in Yemen and Oman. RIL has already made oil discoveries in the onshore Malik 9 block in Yemen. The development plan for the block has been approved by the Republic of Yemen and test production commenced in December 2005.
Headquartered in Dubai, the RIL subsidiary will first take over the assets RIL has secured in the West Asian countries.
Modelled on OVL, the investment arm for ONGC’s overseas oil assets, the new RIL subsidiary will be the holding company for all overseas upstream assets in oil and gas. This restructuring is being done to reduce the risks on RIL’s balance sheet as many of these oil assets are in politically risk-prone areas.
RIL, which had confined itself mainly to exploration and production within India, has now taken up overseas expansion in a major way. Armed with its success in the Krishna Godavari deepwaters (KG basin), the company has been looking at opportunities in oil-rich nations including Russia and Central Asian countries. As is the case, most of the new oil assets and opportunities are increasingly being offered in countries facing political turmoil. A recent case is the oil block in Iraq which RIL and OVL are taking up jointly.
“The political risks in these countries are huge and exposing RIL to such uncertainties could impact valuations,” said an analyst. The subsidiary was floated in the third quarter of 2006-07.
RIL has interests in exploration of overseas blocks in Yemen and Oman. RIL has already made oil discoveries in the onshore Malik 9 block in Yemen. The development plan for the block has been approved by the Republic of Yemen and test production commenced in December 2005.
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In the Oman offshore block, where RIL is the operator, the existing seismic data has been collected and 2D reprocessing of data is underway. RIL has also signed a Technical Evaluation Agreement with ANH (Columbia’s hydrocarbon regulator) and also entered into a co-operation agreement with Ecopetrol (National Oil Company of Columbia) for farm-in opportunities in that country.Start a SIP with as low as ₹500 with ET Money App!
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