Oil&Gas Eurasia Blog

Mukesh Ambani-run Reliance Industries today said it has successfully tested the design capacity of its massive eastern offshore Krishna-Godavari basin D6 field production facilities.

“A flow rate of 80 million standard cubic meters (the peak production envisaged from KG-D6 fields) was achieved through the KG-D6 facilities and delivered” to the pipeline, a company statement said here.

RIL, which is currently producing about 60 mmscmd gas from two of the 18 gas discoveries in the KG-D6 block, has put deep-sea production facilities to produce 80 mmscmd. These facilities were successfully tested last week.

“Within a month of emerging as the largest producer of natural gas in the country, RIL announces that it has successfully carried out an assessment of the design capacity of the KG-D6 deepwater gas production facilities on December 23,” the statement said.

80 million units of gas was delivered to the Reliance Gas Transportation Infrastructure Ltd — the firm that owns the East-West pipeline that transports the KG-D6 gas from Kakinada on the Andhra coast to Baruch in Gujarat.

“At present, RIL is producing about 60 mmscmd of gas which is being supplied to several priority sectors identified by the Government under its Gas Utilisation Policy,” it said.

Source: Economic Times

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Sources indicate that Reliance Industries (RIL) has updated its non-binding proposal for LyondellBasell (LB). CNBC-TV18 learns that the revised proposal has a significantly higher cash component of USD 5-6 billion from the earlier offer of USD 2 billion. CNBC-TV18’s Nayantara Rai reports.

The Apollo Group, which have an exposure as lenders to LB of about USD 10 billion, have submitted a new restructuring plan in which they had said they would be willing to convert USD 18 billion of secured and bridged loans into equity and to an addition to that USD 2.8 billion as cash to backstop LB’s rights offer.

So for RIL to have any chance at all of getting a stake in LB would have to compete with the offer that had been made by Apollo and therefore just have to increase the cash offer.

The previous proposal was about USD 12 billion that included a cash component of about USD 2 billion. Sources say RIL’s updated proposal comprises a cash component of nearly USD 5-6 billion, which will then be significantly higher than what the Apollo Group has also submitted. We also gather that RIL is also simultaneously gaining support from the unsecured lenders.

Remember, LB has struck an agreement with these unsecured lenders. Sources say these unsecured lenders feel that perhaps they could expect a better deal from RIL.

The hearing will be on February 10, so we are going to have to really wait and see, which way the court swings towards because on one side you have RIL and on the other you have the Apollo Group, which are the lenders to LB and the possession of some of their assets, have an exposure of USD 10 billion and are willing to fork out USD 2.8 billion for the company.

Source: Money Control

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Reliance Industries (RIL), the country’s largest private sector company, has announced its third successive gas discovery in the exploration block KG-DWN-2003/1 (KG-V-D3), of NELP-V. The deepwater block KG-DWN-2003/1 is located in the Krishna basin, about 45 kilometers off the coast in the Bay of Bengal. The block covers an area of 3288 square kilometres. RIL holds a 90 per cent participating interest (PI) and Hardy Exploration and Production India Inc holds the rest.

The well KGV-D3-R1, the third in this block was drilled at a water depth of 1982 m and to a total measured depth of 4113 m. The objective was to explore the Miocene deep water lobe and onlapping wedges play fairway. Three reservoir zones were encountered at Miocene Level having gross thickness of 4, 23 and 16 metres. The potential of these were evaluated through a wire-line based technology called Reservoir Characterization Imager (RCI).

The discovery namely “Dhirubhai - 44” has been notified to the government of India and the Directorate General of Hydrocarbons. The potential commerciality of the discovery is being ascertained through more data gathering and analysis.

The discovery supplements RIL’s understanding, of the petroleum systems within the block. 3D seismic has been acquired over the entire block area. Besides the above discoveries, several prospects have been mapped at different stratigraphic levels to fulfill the balance minimum work commitment of three wells.

RIL is likely to drill three additional exploration wells on the block before the end of 2010.

In August 2005, Reliance and HEPI were awarded D3 block under NELP-V. Reliance is the operator of the block.

Exploration drilling commenced on this block in 2008.

Source: Business Standard

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Mukesh Ambani, India’s richest man and chairman of the country’s largest private sector company, Reliance Industries, has been ranked the fifth-best CEO in the world by Harvard Business Review.

Ambani, the only Indian to feature among the top 50 CEOs, is in the same league as Steve Jobs of Apple, Yun Jong-Yong of Samsung Electronics, Alexey Miller of Russia’s Gazprom and John Chambers of Cisco Systems. For the ranking, HBR collected data on over 2,000 CEOs of 48 nationalities, from companies based in 33 countries.

Only two Chinese CEOs — China Mobile President Wang Jianzhou, ranked 41, and CNOOC President Fu Chengyu, ranked 42 — feature on the list.

Mukesh Ambani is also ranked number two among the top 10 emerging market CEOs, with Miller at the top. K V Kamath of ICICI Bank is the other Indian in the list of top 10 emerging market CEOs. He is ranked number 9.

“Among the up-through-the-ranks leaders on our list are Yun Jong-Yong, who joined Samsung straight out of college and worked there for 30 years before becoming the CEO, and Mukesh Ambani, who joined RIL in 1981, when it was still a textile company run by his father. These CEOs may not be household names, but here’s an objective look at who delivered the top results over the long term,” Morten T Hansen, Herminia Ibarra and Urs Peyer, authors of the report said.

“To be sure, we had reliable and sufficient data. We excluded CEOs who had assumed their roles before 1995 or after 2007. We measured their financial performance through the last day of their tenure or September 30, 2009. All told, we ended up with 1,999 CEOs from 1,205 companies,” the report said.

Steve Jobs, ranked the best CEO, delivered a whopping 3,188 per cent return on shareholder value (after adjustment to make the figures comparable across sectors) or 34 per cent compounded annually, since he rejoined Apple as CEO in 1997, when the company was in dire straits. From then till this September, Apple’s market value increased by $150 billion.

Jobs was followed by Yun Jong-Yong, who ran South Korea’s Samsung Electronics from 1996 to 2008. “Yun is an example of a leader who has stayed out of the limelight. During his tenure, he capably transformed Samsung from a maker of memory chips and me-too products into an innovator selling digital products such as leading-edge cell phones,” the report added.

“On an average, the top 50 CEOs increased the wealth of their shareholders by $48.2 billion. These CEOs delivered a total shareholder return of 997 per cent during their time in office. That translates into a spectacular annual return of 32 per cent,” the report said.

While Ambani and Chambers were the only two on the top five to hold degrees in business administration, the top three CEOs did not hold an MBA. Many other celebrity CEOs also failed to make the cut, including Carlos Ghosn of Renault-Nissan, Sergio Marchionne of Fiat, John Mack of Morgan Stanley, Jeffrey Immelt of General Electric, Daniel Vasella of Novartis and Robert Iger of Walt Disney.

CEOs from US-based companies fill 19, or 38 per cent of the slots on the top 50 list. Only 1.5 per cent were women, and only 15 per cent of the CEOs worked for companies based in a country that was not their country of origin.

Source: http://www.business-standard.com/india/news/mukesh-ambani-ranked-5th-best-ceo-inworld/380032/

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Reliance Industries Ltd (RIL) has emerged as the biggest wealth creator in FY 09, generating Rs 1,51,400-crore, which accounted for over 15 per cent of the total wealth created last year, a study said.

Brokerage firm Motilal Oswal, in a study released today, said oil and gas continues to be the biggest wealth creator during the last six-years–the first three years led by state-run ONGC and the next three by RIL.

Reliance Industries has emerged as the biggest wealth creator for the third time in a row. It has created Rs 1,514- billion worth of wealth contributing 15.6 per cent of total wealth created in FY 09,” the study titled ‘14th Motilal Oswal Wealth Creation Study’ said.

The Mukesh Ambani-led company is the largest contributor of wealth for the third time in a row, while real estate firm Unitech was the fastest wealth creater since 2004, the study said.

Motilal said that Unitech’s five-year stock price recorded a staggering compound growth of 122 per cent.

Apart from RIL, home-loan lender HDFC, pharma company Sun Pharma, auto major Hero Honda and software exporter Infosys Technologies have emerged among the top 100 wealth creators in the past 10-years.

“HDFC is ranked as the most consistent wealth creator by virtue of its 10-year price CAGR (compound annual growth rate) being the highest,” the study said.

Source: PTI

The State-run NTPC will not suffer Rs 30,000 crore loss if it was to get natural gas at prices higher than those committed by Reliance Industries five years ago, Power Ministry has told Parliament.

“There is no loss to NTPC on account of fuel cost as the fuel cost is a pass-through to beneficiaries (customers),” Minister of State for Power Bharatsinh Solanki said in a written reply to Rajya Sabha.

It has finally reiterated RIL’s stand that there is no justification for NTPC to talk about the savings of Rs 30,000 crore when it is buying gas at USD 11 per mmbtu when it can get gas at USD 4.2 per mmbtu from RIL’s KG D6 basin.

NTPC had taken RIL to court seeking implementation of the Mukesh Ambani-run firm’s 2004 bid to supply 12 mmscmd of gas at USD 2.34 per mmBtu for 17 years.

“NTPC’s tariff is determined by Central Electricity Regulatory Commission (CERC). As per the regulation for fixing the tariff under the Electricity Act 2003, the fuel cost (price of gas) is a pass-through to beneficiary states/union territories who in turn realise this from consumers,” he said.

Source: PTI

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Reliance Industries Ltd on Wednesday reiterated its earlier stand before the Supreme Court that the government being the owner had the last word on gas pricing.
RIL in its final phase of arguments before a bench headed by Chief Justice K G Balakrishnan said Anil Ambani-led RNRL has itself maintained that the May 12, 2005 draft contract between RIL and NTPC should be the template for fixing gas prices and the same provided for the government approval.
RNRL has been demanding gas at $2.34 per unit, the rate at which RIL had agreed to supply gas to power PSU NTPC in a international competitive bidding.
RIL said the June 30, 2005 draft contract between it and NTPC specified that government approval was needed for supply of gas at $2.34 per mmbtu. The family MoU of 2005 between Mukesh group and his estranged younger brother Anil for supply of gas to latter’s Dadri power project was based on the draft NTPC contract, RIL counsel Harish Salve said.
“If you go by the NTPC draft agreement which the RNRL says is the template agreement for the supply of gas, then there exists a clause that the price of the gas is subject to the government approval,” he said, adding that “RNRL’s contention is vague and absurd.” He refuted RNRL’s arguments that it had a reservoir of gas of more than 400,000 square kilometer and clarified that many of these wells did not yield gas so far.
The MoU was only for supplying gas from KG basin as long as it lasted and that too subject to the government approval, he added.
RNRL counsel Mukul Rohatgi said if it did not have a appropriate agreement specifying clearly six issues related to price, tenure, quantity for gas supply to its Dadri plant, then demerger scheme would be in jeopardy.
“One of the four businesses of RIL which were demerged to Anil as per the would be extinguished if the MoU is not executed as per the scheme. The court has powers to annul the scheme of demerger and this will be disastrous. Nobody wants it. Even the shareholders do not want it. It would be an extreme step,’’ he said, adding, “I want to trouble the court least but request the court to remove the hitches”.
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The Mukesh Ambani-run Reliance Industries (RIL) has reopened about two-thirds of its 1,432 petrol pumps in the country and is selling about 2,000 kilolitres of auto fuel per day, RIL President (Refinery Business) P Raghavendran said today.

“We are selling about 2,000 kl per day from 900 petrol stations, mostly in the Western and Southern markets,” he said here, adding at many of these stations, it is selling the fuel at rates on par with the heavily subsidised price of its public sector rivals.

Reliance had shut its 1,432 filling stations in March 2008 after sales dropped to almost nil as it could not match the subsidised price offered by the government-owned IndianOil, Bharat Petroleum and Hindustan Petroleum, who got compensated from the government for selling fuel below cost.

“We are selling where we can match PSU price,” he said.

The three state-run retailers sell petrol at Rs 3.85 a litre lower than cost of production and diesel at Rs 3.71 per litre lower.

Raghavendran said we are the only nation that is so heavily dependent on imports to meet oil needs yet subsidies the fuel heavily.

Unlike sectors like fertilizers, the oil subsidy is limited only to public sector firms, he said, and pointed out that in the 2008-09 fiscal, the government issued oil bonds worth over Rs 103,000 crore to PSU fuel retailers for selling petrol, diesel, domestic cooking gas and kerosene below cost.

The model of permanently adopting such a large subsidy programme is not sustainable for the economy, he said.

Reliance surrendered its only-for-export status for one of its refineries in Jamnagar which is now being used to supply fuel to its outlets.

Essar Oil, which used the sliding oil prices since October 2008 to reopen 1,292 out of its 1,316 petrol pumps and is planning to add another 1,500 in next one year, is also selling fuel at almost the same rates as PSU rates.

IOC, BPCL and HPCL get bonds from the government and discounts from crude producer ONGC for selling petrol, diesel, domestic LPG and kerosene below cost. The same compensation is not given to private retailers like Reliance, Essar and Royal Dutch Shell, he pointed out.

Source: http://www.business-standard.com/

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Hardy Oil & Gas Plc and partner Reliance Industries Ltd. may drill seven wells at two gas fields that could mark it as the largest in India with reserves estimated at as much as 20 trillion cubic feet.

The U.K.-based explorer specializing in South Asia and Nigeria and Reliance Industries are currently drilling one well in the KG-D3 block and may drill another three wells next year, Chief Executive Officer Perayya Sastry Karra said in an interview in New Delhi today. They also plan to drill three wells in the KG-D9 block after abandoning one that showed “poor” reservoir sands, the company said in October.

“We went after the biggest prize,” Karra said. “These fields are likely to be huge, and we will take a re-look at the possible reserves by March when we have completed more wells in the two blocks.”

Hardy in May estimated that potential resources in the D3 and D9 fields may be as much as 9.5 trillion cubic feet and 10.8 trillion cubic feet, respectively, citing figures from consultant Gaffney, Cline & Associates Ltd. The forecast puts the two fields together at twice the size of India’s biggest, also operated by Reliance Industries, India’s most valuable company.

The two blocks located in the Krishna-Godavari basin may help Reliance, the operator and 90 percent owner of the two fields, boost income from selling natural gas in the world’s second fastest-growing major economy, where availability of the fuel is half the amount needed to run power, chemical and fertilizer plants.

Source:

http://www.bloomberg.com/apps/news?pid=20601091&sid=aJHeaA_dtmD4

Mukesh Ambani, chairman of Reliance Industries Ltd, India’s largest private company, today laid down a road map for business transformation and value creation for the company at its 35th annual general meeting.

Ambani said the company has lined up aggressive plans for oil and gas exploration work over the next three years, as it seeks to further strengthen its position in the energy business. It would include overseas acquisition. Reliance was working on developing nine gas fields around the Dhirubhai-1 and -3 gas discoveries, currently producing around 45 million standard cubic meters per day (mscmd) or 40 per cent of India’s total gas output. “Initial field development planning for accelerated monetisation of nine more gas discoveries in this block is underway,” Ambani added.

The company is also planning a new petrochemical complex at Jamnagar in Gujarat, with an annual capacity of two million tonnes of olefins and matching downstream capacities increasing the total capacity to four million tonnes.
Reliance began pumping gas from its find in the Krishna-Godavari basin off India’s east coast in April. “Gas production has crossed six billion cubic metres and the field is slated to plateau production by the second half of 2010. This production is from just three of the 19 discoveries in the area,” he said.

The Krishna-Godavari basin’s D6 block began oil production in September last year and is currently producing between 10,500 and 11,000 barrels of oil per day from three wells. Three more wells are to be added to more than double the output. “Oil production from the D26 (MA) field has been 2.8 million barrels (since production started) with daily peak production expected by the end of the year,” Ambani told the shareholders.

On November 10, RIL announced it had made its first oil discovery in the Cambay basin, Gujarat. “Reliance will continue to accrue oil and gas properties overseas to add to existing assets in Oman, Yemen, Colombia, East Timor and Peru,” Ambani added.
Reliance has a current cash balance of Rs 19,400 crore and its net debt is now at less than 21 months of cash flow, Ambani said.
As part of its corporate social responsibility intiative, he announced that the company would be setting up a Rs 500-crore Reliance Foundation to address the social development imperatives of the country. The corpus would be later increased to Rs 1,000 crore and would provide formal and vocational education, high-quality healthcare, rural development and urban renewal, and protection and promotion of India’s heritage of arts and culture.

Source: http://www.business-standard.com/india/news/mukesh-ambani-lays-out-aggressive-vision-for-ril/376790/

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