In a bid to unlock value at one of the world’s largest gas finds in the Krishna-Godavari basin, Reliance Industries Ltd (RIL) is believed to be planning to divest up to 10% stake in its K-G D6 block to a strategic foreign partner. A 10% stake in the block, valued at Rs 59,800 crore according to Deutsche Bank, will fetch RIL a neat sum, which could be further pumped into exploration and production (E&P).
RIL holds 90% in the K-G D6 block and Nikko Resources, the rest.
Agencies reported on Thursday that RIL has initiated talks with a host of big global energy E&P players as potential partners. Hydrocarbon giants with the required expertise include the likes of ExxonMobil, Shell, BP, Total and Petrobras. However, the move could not be independently confirmed, as Reliance officials remained tight-lipped about it. An RIL spokesperson declined to comment.
Industry sources said RIL would prefer a strategic partner since it will also bring along the expertise in deepwater drilling required on this block. The market cheered the news; the RIL stock went up by 2.05% on Thursday to close at Rs 2,467.70 on the BSE.
Goldman Sachs is one of the consultants for the deal and RIL is sharing data with prospective partners to reach a valuation for the deal, reports said.
“The decision to sell 10% stake in K-G D 6 is to get in a global E&P partner who can provide the technical support to go for ultra-deepwater exploration in RIL’s other hydrocarbon reserves in India as well overseas, apart from pumping it further into E&P,” said Sudeep Anand, an analyst with Religare Securities. Another analyst said that this could be more of a JV that is mutually beneficial.
Reports said the level of divestment has not been finalised as yet, but it could be for up to10 %, and that the valuation figure was yet to be arrived for the deal. K-G D6 is the second largest deepwater find in the world, and is being brought to production in less than six years of its discovery at a cost of $2.8 per barrel of oil equivalent. Commercial production of gas from this block is expected in the second half of 2009.
In October last year, RIL received the petroleum ministry’s approval to price the gas from K-G D6 at $4.2 per mBtu at delivery point (Kakinada) for the first five years of production.
Source: Financial Express