RIL gets approval to transfer Krishna Godavari assets to subsidiaries
29 Aug 2008
Mumbai: Reliance Industries (RIL) has received an approval from the Directorate General of Hydrocarbons (DGH) to transfer an 80 per cent stake of the D-6 assets in the Krishna Godavari (KG) basin to four unlisted subsidiary companies.
The directorate said that Reliance's proposal was in accordance with the provisions of the production sharing contract.
Two months ago, Reliance had proposed to transfer 80 per cent of its 90 per cent interest in block D-6 located in the Krishna Godavari basin off the east coast of India. The DGH evaluated the proposal in light of provisions of the production sharing contract signed for D6 that had been awarded under the first round of bids under NELP in 1999.
In a letter to the petroleum ministry, the DGH said that the assignment of participating interest to affiliates was permissible under article 28.9 of the production sharing contract, as the parent company remains the operator, and takes guarantees to fulfil all obligations including the work committed.
The letter was in response to to petroleum ministry having sought the DGH's advice with respect to RIL's request. DGH cited four other instances where more than 50 per cent of participating interest was transferred to affiliates companies, in the cases of transfer of stake by Focus Energy, Niko Resources and Jubliant Enpro.
RIL has a 90 per cent holding in D-6, and the balance 10 per cent is held by Niko Resources of Canada. Eighteen oil and gas discoveries have been reported in the block till date.
RIL had sought permission to transfer the stake to four unlisted, 100 per cent subsidiaries to enhance its flexibility to raise finances. The company is planning to commence production of oil and gas from the D-6 block by next month. At peak output, oil production is envisaged to be in the range of 40,000 barrels per day, while gas output is estimated at 40 million standard cubic metres a day.
Reliance Industries has also partnered with the AGR Group, a Norwegian oil technology and services provider for advisory services in the D-6 oil and gas in the Krishna-Godavari (KG) basin for a three-year period. Reliance's contract with the AGR Group is reported to be in the range of Rs178 crore. The Group would provide services for the D-1and D-2 gas fields, and the D-26 block in the KG basin.