The Hindu : Reliance strikes oil in Yemen

Online edition of India's National Newspaper
Tuesday, Jun 17, 2003

Business

Business

Reliance strikes oil in Yemen

By Our Staff Correspondent

MUMBAI JUNE 16 . Reliance Industries Ltd. today announced that it has struck oil in an onshore block in Yemen where the company has an equity oil position of 17 per cent. The Yemen discovery is expected to be equivalent to about half of Reliance's share of crude oil from the Panna-Mukta-Tapti offshore fields in the Bombay High region, said Mukesh Ambani, Chairman and Managing Director.

Speaking at the company's 29th annual meeting here, Mr. Ambani said since estimating in-place gas volume of 7 trillion cubic feet in the KG-D6 off the Andhra Pradesh coast, Reliance had intensified exploration efforts and in the first phase, it had drilled eight wells. Since then, Reliance had found an additional 7 trillion cubic feet of gas; doubling the total in-place gas volume to 14 trillion cubic feet. "This is the equivalent of 2.3 billion barrels or 300 million tonnes of crude oil. These discoveries are capable of producing in excess of 60 million standard cubic metres of gas per day. At current market prices to the consumer, this means an incremental revenue of Rs. 10,000 crores every year for Reliance, which is equivalent to about 15 per cent of our current revenues,'' said the RIL Chairman adding that this business be "the fountainhead of growth and prosperity of Reliance and of India in the 21st century.''

Reliance is committed to spend about Rs. 1,500 crores in the next two years in exploration. In addition to the Krishna-Godavari Basin, Reliance is exploring for oil and gas in the proven Bombay High Basin and the prospective Mahanadi offshore and Kutch offshore Basins. "These include nine new exploration blocks that Reliance added during the year, covering an area of 114,000 sq. kilometres. As a result, Reliance now has rights to 32 exploration blocks in India covering a total area of 288,000 sq. kilometres,'' Mr. Ambai said.

Concurrent with gas exploration and production in the KG basin, Reliance will be building a gas transmission infrastructure, to take gas to industrial, commercial and household consumer by the year 2006. Reliance also has the necessary approvals for setting up 5,800 outlets for petroleum retailing. "The project is moving rapidly and work is already underway to establish up to 1,500 retail outlets in the first phase,'' said Mr. Ambani.

Reliance is significantly investing in its core business of petrochemicals and as a result, over two million tonnes per annum of additional capacities have been planned in the next three to five years.

Reliance Infocomm overcomes problems

Regarding Reliance Infocomm, Mr. Ambani said up to March 31, 2003, the company had invested Rs. 4,850 crores in it. This comprised Rs. 2,362 crores in equity and Rs. 2,488 crores in debt. Further, Mr. Ambani said there were initially fears about the magnitude of problems that could arise "in such a huge undertaking — covering 693 cities and offering voice, data video and value added services all in one go. But I had never a moment of doubt in Reliance's capacity to overcome all these problems and set at rest all doubts and anxieties. My faith has been vindicated and all these issues are now behind us.'' The company would launch its prepaid service in two months.

In terms of capital cost per subscriber, Mr. Ambani informed Reliance Infocomm's costs were about 50-70 per cent lower than cost of all new global telecommunication deployments in recent times. "Today, we proudly service 1.5 million customers using digital services of Reliance IndiaMobile,'' said Mr. Ambani.

On his vision for the future, Mr. Ambani said Reliance would pursue a strategy of reinforcing competitive advantage of existing business though new capacities and synergistic acquisitions, scaling sizable opportunities in petroleum exploration and production and forward integrating into retailing transportation fuels and creating new customer experiences. Mr. Ambani said in this endeavour, Reliance would undergo an upgradation from being an intermediate goods producer to being a final goods and services provider, "in addition to vertical integration in hydrocarbon energy markets to horizontal integration over diverse energy markets.''

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