NEW DELHI, OCTOBER 12:
Mukesh Ambani-led Reliance Industries domestic oil and gas business portfolio, which shrank to six from 42, is set to further contract to five. The company wants to shed one of its acreages in the western shore, which it holds along with Hardy Oil.
As part of its upstream (hydrocarbons exploration and production) portfolio rationalisation the company has been exiting those assets which it feels are not going to give good return on investment. “But, this does not mean the company is exiting the business completely,” an official said.
Sources in the know said that RIL has been in discussions with Hardy Oil to sell its portion on the basis of block’s joint operating agreement. Though it is a discovered asset, RIL wants to exit, as it feels that reserves may not be economically significant, besides uncertain Government policy regime is also proving a deterrent, an official said.
RIL’s upstream business had taken a major hit with the output from its producing D-1 and D-3 gas fields in the Krishna Basin D6 block falling drastically.
The fields, which once were producing from 18 wells, today are flowing gas only from eight wells.
Together with MA fields in the block, the total number of producing wells was 12, another source said.
At present, RIL has one block each in Krishna Godavari Basin (KG-D6), Cambay (CB-10), Mahanadi (NEC 25), and Saurashtra basin (GS-01), and two in Cauvery basin (CY D5 and CY D6). Besides, it also has stake in Panna-Mukta-Tapti fields and two Coal Bed Methane (CBM) blocks.
According to RIL’s first quarter report, it had relinquished an exploration block in Cauvery as part of its domestic portfolio rationalisation.
Regarding reports about RIL wanting to sell its 45 per cent stake in the Eagle Ford basin shale oil and gas venture in the US for an estimated $4.5 billion, sources said this is a common business pattern in the US – shifting base depending on the viability of the project.
However, the RIL spokesperson maintained that as a policy the company did not comment on market speculation.
Continued drop in oil prices has changed the dynamics of the shale business.
According to international reports, Pioneer Natural Resources has put its oil assets in the Eagle Ford shale up for sale.
In its first quarter of the current fiscal, RIL had said that its US shale joint operations are on a growth path. During the quarter revenues from the business were at $270 million up 26 per cent year-on-year.
The company has three joint ventures for its shale business in the US with Pioneer, Carrizo, and Chevron.