Mumbai: Reliance Industries Ltd (RIL), the largest private sector company in the oil and gas exploration business, is looking to form an alliance with US-based oil firm Chevron Corp., according to P.M.S. Prasad, president of the company’s oil and gas business.
Exploration, especially in deep-sea blocks off the country’s coast, is an expensive process involving complex technology and Indian companies typically look for a foreign partner that can provide expertise as well as share the financial risk. Chevron did not respond to an e-mailed questionnaire.
Prasad said that the alliance with Chevron will likely be modelled on the one RIL has with Canada’s Niko Resources for exploring the D-6 (or Dhirubhai-6, after the late Dhirubhai Ambani, RIL chairman Mukesh Ambani’s father) block in the Krishna-Godavari (KG) basin off the country’s East coast. Gas has been discovered in this block in which Niko has a 10% stake. RIL has a similar alliance with Hardy Oil and Gas Plc. for two other blocks, D-3 and D-9 in the KG basin.
Reports of deals concerning RIL and Chevron have appeared frequently in Indian media after the latter spent $300 million for a 5% stake in RIL subsidiary Reliance Petroleum Ltd shortly before the company went in for an initial public offering in April 2006.
Chevron, the world’s fifth-largest integrated energy company, has the option of raising its stake in the company to 29% at a later date that hasn’t been specified by the two companies. The companies have also signed an agreement expressing the intent to collaborate in other energy-related areas, including exploration.
Prasad said that the partnership RIL was exploring was for four exploration blocks at depths of more than 2,000ft that the company had won in 2003 in the third round of the New Exploration Licensing Policy (Nelp). These blocks are in the Cauvery-Palar basin on the southern tip of India’s East coast. RIL has already spent Rs850 crore on exploring these, added Prasad.
Prasad said that while the company has sourced deepwater technologies being used at KG basin from service providers such as Schlumberger and Aker Kvaerner, it was considering an alliance with Chevron for ultra deepwater blocks in the Cauvery-Palar basin.
Such an alliance would give RIL “access to their (Chevron’s) experience, technology and experienced people,” added Prasad.
RIL’s four blocks in the Cauvery–Palar basin have a total acreage of 41,770sq. km. It had initially bid for the blocks along with Hardy Oil and Gas, but Hardy sold its 10% interest to RIL in 2004.
The company has currently sought a two-year moratorium on exploration work in three of the blocks given the shortage of oil rigs. For the fourth block, it has sought an extension for the first phase of its exploration efforts. Under Nelp, companies have to stick to a certain time-frame for their exploration activities.
RIL has reported gas discoveries in D3, D6, and D9 blocks in KG basin and NEC25 block in the Mahanadi basin.