The Hindu Business Line : RIL likely to close 2 oil block deals in Peru

New Delhi, Sept. 4 Reliance Industries Ltd (RIL) is at an advanced stage of closing contracts for farm-in activities in two oil blocks in Peru. According to sources, RIL has completed the negotiations and indications are that the company would be firming up the contracts shortly. The names of the blocks are not disclosed.

Farm-in activities is a well accepted practice in the international scenario. Under this concept a company does not acquire the property directly, but rather develops the oil and natural gas properties by taking participating interest in the block and also shares the risk involved in the exploration activity with the operator.

Overseas assets

RIL already has 11 overseas oil and gas assets, with the most recent being a block in Australia. If the company successfully acquires interests in two blocks in Peru the total number of overseas assets of RIL will go up to 13. The company is looking at opportunities in Africa, Latin America and West Asia.

In July, Reliance was granted an exploration permit for block WO6-05 in the Bonaparte Basin in Western Australia, its first exploration block in the region. RIL also has two blocks in Iraq, three in Yemen, one in East Timor, and two each in Oman and Columbia. The company has got these assets either through a consortium or on its own.

The block in Australia measures 5760-sq. kms and lies in water depths of between 100 and 120 metres. Australian authorities have issued four exploration permits to three other companies in the Bonaparte Basin in this round — China National Offshore Oil Corporation Australia (one permit), Goldsborough Energy (one permit) and Total Australia (two permits).

In Yemen, RIL’s Block 9 started oil production in December 2005 with an initial rate of around 2000 barrels of oil per day. RIL has 20 per cent stake in Block 9. Canada’s Calvalley Petroleum is the operator of the block with 60 per cent stake while Hood Oil has the remaining 20 per cent. The company also has been awarded two onshore exploration blocks 34 and 37 in Yemen in partnership with local company Hood Oil. Blocks 34 and 37, each measuring around 7500 sq. kms and located on the border with Oman, were among the seven blocks offered by Yemen in its second licensing round.

The success in Yemen has been followed by acquiring assets in Oman. Last year the company acquired acreage in East Timor.

RIL has also initiated talks with state-owned Indian Oil Corporation Ltd (IOC) for acquiring assets in third countries, particularly South East Asia. Indications are that IOC on its part has also envisaged interest for farm-in opportunities in RIL’s existing assets.

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