Reliance goes on block buying spree

09/14/2007 03:49:43 PM EDT

RELIANCE Industries claims to be at an advanced stage of negotiations
to secure contracts for farm-in activities in two oil blocks in Peru,
and is looking at opportunities in Africa, Latin America and West
Asia, either through the consortium approach or on its own, writes
Shirish Nadkarni.

If the Mukesh Ambani-led company successfully acquires interests in
the two Peruvian blocks, the total number of its overseas assets will
go up to 13.

Its earlier acquisitions have been two blocks in Iraq, three in
Yemen, one in East Timor, two each in Oman and Columbia, and one in Australia.

The most recent acquisition was the WO6-05 exploration block in the
Bonaparte Basin in Western Australia, its first block in the country.

The block measures 5,760 sq kms and lies in water depths of between
100 m and 120 m.

Australian authorities have issued four exploration permits to three
other companies in the Bonaparte Basin in this round Total Australia
(two permits), China National Offshore Oil Corporation Australia and
Goldsborough Energy (one permit each).

In Yemen, Reliance’s Block 9, in which it owns a 20% equity stake,
started oil production in December 2005, with an initial rate of
around 2,000 barrels of oil per day.

Canada’s Calvalley Petroleum is the operator of the block with 60%
stake, while Hood Oil has the remaining 20%.

The Indian outfit has also been awarded onshore exploration blocks 34
and 37 in Yemen, in partnership with local company Hood Oil.

Blocks 34 and 37, each measuring 7,500 sq km and located on the
border with Oman, were among the seven blocks offered by Yemen in its
second licensing round.

Reliance has followed its success in Yemen by acquiring assets in
Oman. Last year, the company acquired acreage in East Timor.

It has also initiated talks with state-owned Indian Oil Corporation
to acquire assets abroad, particularly in South East Asia.

Indications are that IOC is also interested in farm-in opportunities
in Reliance’s existing assets.

Reliance has also acquired a majority stake and management control in
an East Africa-based oil retail distribution company, Gulf Africa
Petroleum Corp.

The acquisition was made through its wholly-owned subsidiary,
Reliance Industries Middle East, a company registered in the United
Arab Emirates.

Headquartered in Mauritius, GAPCO operates in the downstream petroleum sector.

It was formed in 1992 to acquire the retail petroleum marketing
assets of Esso in Tanzania, Uganda and Mauritius; and today owns and
operates storage terminals in Dar-es-Salaam (Tanzania), Mombassa
(Kenya) and Kampala (Uganda). It has other depots in East and Central
Africa, and runs over 250 outlets, covering the retail and industrial segments.

Reliance has described the acquisition as strategic, helping it
achieve its ‘global vision in the petroleum downstream sector’.

GAPCO’s synergies with Reliance’s Indian assets are apparent. One of
the feathers in the Reliance domestic crown is its 660,000 bpd
refinery at Jamnagar on the Gujarat coast.

Another refinery with a capacity of 580,000 bpd is being established
in the same region by subsidiary Reliance Petroleum.

The GAPCO buy will help Reliance integrate the value chain,
consisting of refining, shipping, trading, terminals and marketing
through both retail and wholesale segments, and help establish a
natural marketing link for its refinery products.


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