The Hindu Business Line : RIL to transfer KG D6 block interest to four subsidiaries

Mumbai, Aug. 26 Reliance Industries Ltd said on Tuesday that it proposes to transfer 80 per cent participatory interest in KG D6 block in the Krishna-Godavari basin oil and gas fields to its four wholly-owned subsidiaries.

RIL has sought the approval of Petroleum Ministry and the Directorate General of Hydrocarbons for the transfer.

In response to a news report, the company spokesperson said: “The proposal has been submitted to the concerned regulatory authorities and approval is awaited. There will be no loss to RIL shareholder value. This is common global practice and would enable the company to enhance its financial flexibility as the company builds its E&P portfolio.”

RIL holds 90 per cent stake in the block, where large gas discoveries have been made, rest of the stake is held by Niko Resources of Canada. The block holds about 14 trillion cubic feet of gas reserves. The company intends to pump out gas from the D-6 block by October.

An analyst with a leading broking firm said that hiving off participatory interest in oil and gas blocks to subsidiaries is not a very common practice among large oil companies. At this point, RIL has taken this step in an attempt to derisk its E&P business.

Currently, E&P, petrochemicals and refining business is on the RIL balance sheet and with global downturn in petrochemicals and refining business on the horizon, RIL wants to cushion its oil exploration business, the analyst said.

RIL shares closed Rs 2,179.65, down 2.30 per cent over the previous close of Rs 2,230.95.

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