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RIL To Work With BP For Output In KG-D6 Basin; Turn Debt-Free

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Reliance Industries will work with BP to address issues in ramping up production at its KG-D6 basin in India, its chairman said on Friday, referring to slowing gas production that has dampened the energy giant's growth outlook.

The conglomerate also plans to invest aggressively in its retail business and will launch cash-and-carry, or wholesale outlets, Mukesh Ambani said at the company's annual shareholder meeting.

Reliance, the largest listed firm in India, is controlled by Mukesh Ambani, the world's ninth richest man with a net worth estimated at $27 billion, according to Forbes.

The company is looking to expand in sectors such as telecom, retail, power, financial services and hospitality.

"Reliance is endowed with a strong balance sheet and depth of talent," Ambani said, adding that the company was "uniquely placed to pursue multiple growth opportunities."

Last year, Reliance made a dramatic return to the telecom business with the $1 billion acquisition of Infotel Broadband, the only company to win a nationwide licence for broadband wireless spectrum in a government auction.

"Broadband - and broadband enabled digital services - is the next big leap forward in the digital transformation of our knowledge economy," Ambani said to shareholders.

He said the company plans to build broadband infrastructure spanning industries such as education, healthcare and financial services.

But energy is still the company's mainstay.

Its D6 block in the Krishna Godavari basin off India's east coast is its biggest gas producer, but output has slipped due to technical problems to about 52 million cubic metres a day (mcmd) from 60 mcmd in 2010 and short of a target of 80 mcmd.

In February, Reliance agreed to sell a stake in 23 of its oil and gas blocks, including some in the KG basin, to BP in a $7.2 billion deal, and is expected to benefit from BP's deepwater exploration expertise.

"After the government approvals for BP-Reliance partnership, KG-D6 reservoir will be jointly assessed to address technical issues in ramping up production," Ambani said.

"Meanwhile, vigorous efforts are underway to accelerate development process of other discoveries," he said, referring to the company's Mahanadi block off the country's east coast and the Cambay block in the western Indian state of Gujarat.

Ambani also said the company would be free of net debt by the end of fiscal year 2012. As of March 31, its long-term debt stood at $12.4 billion, and its cash and cash equivalents were $9.5 billion.

Shares in Reliance, valued at $68.8 billion, turned negative after rising as much as 1.7 percent before the meeting, as the lack of any major announcement by Ambani disappointed investors.

"People were expecting him (Mukesh Ambani) to make major comments on future plans," said Arun Kejriwal, director at research firm KRIS. "Nothing significant has been spoken."

Shares were down 0.5 percent at 946.70 rupees by 12:29 p.m. (0659 GMT) in a Mumbai market that was little changed.

They have fallen more than 10 percent so far in 2011, contributing significantly to the comparative 9.8 percent fall in the main index, in which the stock has the heaviest weight.


(Reuters)