Reliance Industries Ltd, India's largest private sector energy company, is not seeing much success with its oil and gas assets abroad; and has already surrendered three of its 13 overseas blocks, says a Times of India report.
Even as RIL is struggling to ramp up dwindling gas production in the Krishna-Godavari basin, it has surrendered its only block in East Timor after it failed to find oil or gas in viable quantities.
The company had surrendered two blocks in Oman last year. RIL has farmed in Block 39 in Peru with 10 per cent participation interest and relinquished block 155 where it had 28.30 per cent participation interest.
"RIL has surrendered the block after completing the minimum work programme as we did not make commercially viable discovery of hydrocarbons," said an RIL spokesperson in an e-mailed reply to a query by TOI.
With the relinquishing of the East Timor block, RIL has lost Rs800 crore in unsuccessful exploration activities overseas, besides losing Rs1,800 crore in 17 Indian blocks where exploration was unsuccessful, taking its total sunk cost in unsuccessful exploration to over Rs2,600 crore.
The results following the drilling campaign in blocks Oman 18 and East Timor K have not been encouraging and, accordingly, the expenditure incurred on these blocks amounting to $177 million (Rs 807 crore) has been fully provided for in the books of Reliance Exploration and Production DMCC (REP-DMCC), a wholly-owned subsidiary of RIL, the company said on its website. REP-DMCC own stakes in RIL's overseas exploration blocks.
JP Morgan has put an "underweight' rating on RIL and reduced its price target by Rs100 to Rs650 citing lack of earnings growth and high valuations.
But analysts point out that hydrocarbon exploration is always a high-risk, high reward business, and explorers expect to sink a fair amount of money in prospects that fail to deliver.