RIL reaches for Latin America and Middle East

Reliance Industries are restructuring its overseas acquisitions strategy to include more of producing and discovered acreages, even as the company is on way to pumping 89 million cubic metres per day of gas by 2010 from its Krishna-Godavari basin acreage off the Andhra coast.

Until now, Reliance had focused on exploration acreages that came comparatively cheap but also with the risk of failure to find hydrocarbons. A portfolio mix of producing or discovered fields can offset such risks. "We are now more open to acquiring producing or discovered assets.

Earlier, that was not the case," said P M S Prasad, the president and CEO of the company's oil and gas business. This is aimed at improving "portfolio balance".

Reliance's refining approach has been to use advanced plant configuration to process more of heavier crudes, which come cheaper than benchmark crudes, for rising refining margins. Prasad said the company was trawling Latin America, West Asia and Far East but not Russia and Central Asia. "We want to go where we can win on merit and where there is heavy crude," he said.

The acquisitions strategy shift comes in the wake of the company starting commercially pumping oil from the MA discovery in the acreage and setting the stage for initiating gas production in the first quarter of 2009 calendar year.

Prasad said as of now, the Krishna-Godavari acreage would yield 89 mcmd of gas.

According to present government figures, this will double the availability of gas in the country. The Dhirubhai-1 and 3 discoveries, the first two of the 18 strikes Reliance has reported in the concession that is identified as Block D6, 80 mcmd of gas will come out daily within the next 6-8 quarters. Another 9 mcmd will come out from the MA discovery, predominantly an oilfield, envisaged to produce 40,000 barrels a day when it reaches peak production in 18 months.

Reliance is investing $5.2 billion in bringing Dhirubhai-1 and 3 discoveries that will start production with 15-20 mcmd and reach a peak of 80 mcmd. This peak will last for 2-3 years when the company will invest another $3.5 billion to maintain output for the subsequent 7-8 years. "The field's life is 10-12 years, 7-8 years of which will be plateau," Prasad said.

Author: Jo Amey