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Reliance has no plan to raise bid for Lyondell

Reliance has no plan to raise bid for Lyondell
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First Published: Thu, Mar 04 2010. 01 15 AM IST
Updated: Thu, Mar 04 2010. 12 00 PM IST
Mumbai: Reliance Industries Ltd (RIL) has no plans to increase its bid for bankrupt LyondellBasell Industries AF after creditors rejected a $14.5 billion (Rs66,555 crore) offer, two people briefed on the matter said.
Market conditions didn’t justify raising the offer further, the people said, declining to be identified because they aren’t authorized to speak to the media. Asia’s richest man Mukesh Ambani may be prompted to spend Reliance’s $3.5 billion cash elsewhere, said Victor Shum, an analyst at Purvin and Gertz Ltd.
The Mumbai-based company’s shares surged 4.7% after the bid was rejected on Tuesday for a second time this year.
Reliance is seeking assets abroad to reduce the risk of investing mostly in India, where it is battling a lawsuit over natural gas supplies with a company owned by Mukesh’s estranged brother Anil Ambani.
“Reliance has a very strong position in India but it doesn’t internationally,” Nathan Schaffer, an analyst at PFC Energy, said by phone from Houston. “There will be plenty of opportunities to pick up some attractive assets.”
Alok Agarwal, chief financial officer at Reliance, couldn’t be reached at his office.
Rising crude oil prices coupled with weak global demand for fuels and chemicals are prompting companies to sell assets.
Oklahoma-based Devon Energy Corp., the biggest independent US oil and gas producer, on 16 November announced it was putting oil blocks from the Gulf of Mexico to the Caspian Sea up for sale to raise $7.5 billion to cut debt and fund onshore developments.
Houston-based ConocoPhillips plans to sell $10 billion of assets in two years to cut debt that may include exploration and production holdings in North America and gas properties in the North Sea, chief executive officer Jim Mulva said in October.
Reliance operates India’s biggest natural gas field, owns the world’s largest refining complex at Jamnagar in Gujarat, and has cash holdings of Rs 160 billion . While it has interests in overseas oil blocks, including in Peru, Iraq and Australia, only one in Yemen is producing at 4,400 barrels a day, according to Reliance’s earnings statement for the three months ended 31 December.
Reliance seeks a “far more widespread global footprint” in the near term, Ambani told shareholders on 17 November.
The company may buy oil fields in the Gulf of Mexico and Brazil to hedge the risk of investing mostly in India, P.M.S. Prasad, president of its oil and gas business, said on 14 September.
In December, Reliance hired Walter van de Vijver, a former exploration chief at Royal Dutch Shell Plc, to head its overseas business.
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First Published: Thu, Mar 04 2010. 01 15 AM IST