Reliance discovers gas field in India

Jun 25, 2004 02:00 AM

Reliance Industries, India's biggest non-state-owned company, said that it had found as much as 5 tcf, or 141 bn cm, of natural gas in the eastern state of Orissa, equal to one-sixth of the nation's current reserves.
The announcement at a shareholders' meeting by the chairman of Reliance, Mukesh Ambani, followed the discovery in 2002 off the east coast of as much as 14 tcf of gas, the world's biggest gas find that year and India's largest in three decades.

The "find is good news for the company as it will sharply boost profitability once the gas hits production," said Vidyadhar Ginde, energy analyst at HSBC Securities. The Reliance group, founded by Mukesh Ambani's father, Dhirubhai Ambani, started in textiles and diversified into businesses including oil refining, electricity and telecommunications.
Ambani also told shareholders that Reliance would acquire Trevira, a maker of chemical fibres such as polyester for clothes and packaging. Ambani did not say how much Reliance would pay. Trevira will expand Reliance's synthetic fibres business, which currently contributes 47 % of revenue. Oil refining brings in 50 % and the exploration business 3 %.

The company has said that oil and gas exploration will eventually contribute most of the revenue of the Reliance group, without giving specific numbers. Reliance owns 31 oil and gas exploration sites in India and one in Yemen.
The area in which the latest discovery was made is also where Oil Natural Gas, India's biggest oil explorer, found 800 bn cf of gas in February. Cairn, a British company, found 1 tcf of gas reserves south of Reliance's site.

India, Asia's fourth-biggest oil consumer after China, Japan and South Korea, imports about three-quarters of the 105 mm tons of oil it consumes. It has a gas shortage, with supplies of 70 mm cmpd, compared with demand of more than 120 mm cmpd.
Korea Gas, the world's biggest buyer of LNG, said it may more than double the amount of the fuel it buys under long-term supply agreements to avoid a shortage when a 20-year Indonesian contract expires in 2007.

Korea Gas plans to buy 5.3 mm tons, or about $ 827 mm, of the fuel each year starting in 2008, more than double the 2.3 mm tpy it buys under contract from Indonesia, said Oh Seung Hwan, a manager in Korea Gas's LNG purchasing team.
Gas producers such as Australia and Indonesia are cutting prices to win customers as they develop new fields. Power stations from the United States to Taiwan are switching to natural gas after prices of competing fuels such as oil surged to a record.

Source: Bloomberg News
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