The Hindu Business Line : IOC in talks with RIL for joint exploration

New Delhi, Oct. 10 State-owned Indian Oil Corporation Ltd (IOC) and private company Reliance Industries Ltd (RIL) are likely to join hands for exploration in the latter’s oil block in East Timor. RIL and IOC have been in talks for a possible tie-up to acquire oil and gas assets abroad as well as exploring farm-in opportunities for the PSU major in the existing overseas assets of RIL.

Sources said, “Talks have taken place between the two entities. IOC was looking at farm-in opportunities which would give it participating interest in RIL’s asset.”

Farm-in activities are very common among global oil and gas exploration companies. To come in as a farm-in partner, a company is not required to acquire the asset directly, but develop the property by taking participating interest in the block. The company also shares the risk involved in the exploration activity with the operator.

At a recent meeting, the two companies are understood to have discussed a possibility of IOC joining RIL in the East Timor asset, sources told Business Line.

While both IOC and RIL officials remained non-committal on which asset the former could join, they confirmed that discussions were going on between the two entities.

In May last year, RIL had won a block in East Timor. RIL had bid for two of the 11 offshore blocks tendered by East Timor, but could manage only one contract area. The company had bid for area ‘K’ and area ‘E’, but won only the former.

Besides foraying into domestic oil and gas exploration and production in a big way, RIL is acquiring assets abroad to supplement its crude needs.

RIL has signed an agreement to explore for oil and gas in East Timor. It will explore offshore area in a place known as contract area ‘K’.

The area has proven reserves in the Australian North West Shelf and is adjacent to the Timor Sea.

RIL will hold a majority stake and will operate the area which is spread over 2,384 sq km. This region contains discoveries like Bayu - Undan (commenced production in 2004) and Greater Sunrise.

Currently, IOC has seven overseas assets through consortium approach. It has two each in Libya and Yemen, and one each in Nigeria, Gabon, and Iran. In the domestic oil and gas exploration sector it has 10 blocks.