RIL to spin off overseas oil, gas projects into separate company

Mumbai: Reliance Industries Ltd (RIL) has set up a separate company based in Dubai demerging its overseas oil and gas projects. Reliance Exploration and Production DMCC has been formed with Mukesh Ambani as its chairman.

The wholly owned RIL subsidiary, modelled on the lines of the overseas investment arm of state-run Oil and Natural Gas Corp (ONGC), ONGC Videsh Ltd, is eyeing a tie-up with the public sector company to jointly bid for oil and gas opportunities abroad, industry sources said.

RIL's overseas interests, including a discovered oil block in Yemen and an offshore exploration block in Oman, besides exploration projects in northern Iraq, East Timor and Columbia, will be transferred to the new company.

"Reliance has realised that it needs to de-link assets in politically risk-prone areas from its balance sheet. Besides, it also makes business sense because every time they brought home seismic data of any overseas assets for processing, they paid 12 per cent customs duty," a source said.

"It is keen on bidding together for major opportunities with OVL. OVL, which has presence in 15 countries and has well-known tie-ups like the one with Mittal Steel for overseas oil asset acquisitions, has earned itself a reputation as a serious player. Reliance is a conservative player and would rather like to share risks with OVL," the source added.

Reliance has signed a technical evaluation agreement with ANH (Columbia's hydrocarbon regulator) and also entered into a cooperation agreement with Ecopetrol (national Oil Co of Columbia) for farm-in opportunities in that country. The company is looking at oil and gas exploration in Africa and the Middle East.