Reliance Industries may change its exploration strategy, focussing on foreign assets and reduce risk in India by spreading drilling work over a number of blocks.
Reliance Industries may change its exploration strategy, focussing on foreign assets and reduce risk in India by spreading drilling work over a number of blocks, its executive director said.
For last few years, Reliance’s exploration work and most of its resources centred around India’s massive deep sea fields in D6 block, where it began pumping gas from April, which at full throttle will nearly double India’s gas output. “Now that we are off the D6 so we have to focus our efforts on other areas ... We may change our strategy to drive it in a different direction,” P M S Prasad said.
He said in the next six months Reliance will drill wells at blocks in Oman, Kurdistan and East Timor.
The success of D6 established Reliance, also the owner of the world’s biggest oil refining complex, as a deepwater player and now it is keen to buy acreages in the Gulf of Mexico and Brazil.
Reliance is looking at selling a stake in 6 of its 14 overseas blocks. Prasad said many global firms have shown interest in buying stake in blocks in Oman, Kurdistan and South America.
Reliance holds a 90% stake in the D6 block while Canadian firm Niko Resources owns the rest.
Meanwhile, Reliance Industries said it is losing $100 million of sales a month from the D6 field because of a government delay in allocating buyers for the fuel.
Reliance has been producing 60% of the 60 million cubic meters daily capacity in the KG-D6 field, leading to deferment of its $100 million monthly revenue from May and delayed peak gas output of 80 mmscmd by at least a quarter to April, Prasad said.
The government has select customers only for 40 mmscmd. “We hadn’t expected we’d be held up from producing,” he said.
The company, controlled by the world’s seventh-richest man Mukesh Ambani, is fighting a lawsuit over output from the field with Mukesh’s estranged younger brother Anil Ambani.
The cost of paying interest on Rs 28,000 crore of debt raised to develop the field is increasing because Reliance is unable to repay the borrowings as rapidly as it would like and cut interest costs, Prasad said.
“We would’ve liked to repay the loans quicker,” he said. “We can’t and that is increasing our interest costs. We will service the debt, not default on it.”
Through the 11-year life of the field, Reliance aims to invest $8.8 billion, of which it has spent about $5.8 billion, Prasad said. Beside the debt raised from local and overseas lenders, Reliance will use its own money, he said.
(With Bloomberg inputs)
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