Reliance in talks with Chevron, Exxon, BG for KG field stake sale
14 April 2008
Mumbai: Reliance Industries is in talks with global energy majors, including Chevron Corporation, Exxon Mobil, Shell and British Gas, for a possible stake sale in its Krishna-Godavari basin gas fields.
Mukesh Ambani-promoted RIL is expected to sell more than 10 per cent stake and the company is looking for a strategic partner for its KG-D6 gas block to get deep sea exploration technology, industry sources said.
RIL has appointed Goldman Sachs as the advisor to the possible stake sale and the company is planning to hive off the block that contains over 50 trillion cubic feet of gas reserve into a special purpose vehicle.
At least five companies, including BG, Chevron Corp, Exxon, Shell and ENI of Italy, have visited RIL's data room in New York.
France's Total and Petrobras of Brazil are also believed to be interested in Reliance`s block that is to begin gas production from the third quarter this calendar year.
RIL holds 90 per cent participating interest in the block and Canada's Niko Resources has the remaining stake. The two companies won the block in the first round of the government's New Exploration and Licensing Policy (NELP I) in 2000.
RIL is set to begin production of 20 million cubic metres per day (mcmd) of gas from the block later this year. The production level is expected to go up to a peak 80 mcmd in one year - equal to the current gas availability in the country.
RIL and Niko will spend $5.2 billion to develop the block. Once production starts the consortium will spend another $3.3 billion to maintain it. The sale of gas from the D6 block is expected to be over $16 billion.