Oil giants eye RIL’s overseas asset stakes

Jun 18, 2007 02:00 AM

Global oil giants including Shell, Exxon and Chevron are eying a stake in Reliance Industries’ overseas oil and gas assets.
RIL recently hived off these assets into a separate company called Reliance Exploration and Production DMCC. An internal team of RIL is working on a plan to sell a stake in it to a strategic foreign player, industry sources said.

Chevron already has a 5 % holding in Reliance Petroleum Ltd (RPL), which is building the world's largest greenfield refinery in Jamnagar. It has the option to increase its holding in RPL and had signed an MoU with Reliance for better co-operation in upstream and downstream sectors.
Mukesh Ambani's Reliance Exploration has oil assets in Yemen and Oman and is planning to acquire oil assets in Russia and some African and oil rich West Asian countries. It plans to set up a 50,000 barrel refinery in Yemen and is looking for opportunities in Iraq and Libya.

Analysts tracking the energy sector said the move would not only secure RIL’s overseas oil and gas assets but also unlock value.
“The move to hive off business into a separate holding will secure those assets and when a strategic partner comes, it would create better value for those assets,” said a Mumbai-based analyst from Lehman and Brothers.

As per RIL’s plan, all the existing oil assets in foreign countries would be under the new entity.
“The road map for the transfer of assets has been prepared and the divestment plan details are being worked out,” a source said. The new firm will bid for all future oil and gas assets abroad. A strategic partner will have 20-25 % stake in the new entity.

RIL owns India’s largest refinery with a capacity of 660,000 bpd at Jamnagar. It is building another 580,000-barrel refinery near to the existing one that will make RIL the world’s sixth largest refiner. It also plans to set up a 50,000-barrel refinery in Yemen and is looking at opportunities in Libya, Oman and Iraq.
The company has huge oil and gas findings at the D6 block of Krishna Godavari basin, which itself is being valued at $ 40 bn.

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