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Reliance Industries Ltd (RIL) and Mexico’s state-owned Petroleos Mexicanos (Pemex) have entered into an agreement for assessment of potential upstream oil and gas business opportunities in Mexico. They will also jointly evaluate value-added opportunities in international markets.
RIL and Pemex will share expertise and skills in the relevant areas of oil and gas industry, including for deep-water oil and gas exploration and production.
According to an industry expert, Mexico is one of the last few low-hanging fruits available for oil exploration, situated in an area with proven deepwater potential, ready infrastructure, oil services capability and oil evacuation options. For RIL, this could serve as an option for risk diversification of supply from several countries. It will also enable the company to redeploy its workforce to outside projects as not much is happening in India due to lack of approvals.
Partnership options RIL could also explore JV options with US oil companies such as Shell and Exxon, which have significant experience in the US Gulf of Mexico for bidding/developing oil blocks.
“Possible partnership options, however, can only be finalised on a block by block basis looking at the risk – reward and the technology required. RIL might have to settle for a minority position,” said a market analyst.
According to recent reports, around 270 locations with more than 2,300 exploration opportunities have been identified in deepwater. Also, due to the shale oil boom in the US, Mexico is likely to be more dependent on exports of oil, particularly heavy oil to Asia, and may look for strategic partnerships from this region.
“RIL, with its complex refinery, could serve as a favourable destination for such trade, resulting in a win-win for all,” the analyst said.
Long-term value RIL said in a statement the company’s cooperation with Pemex is in line with its growth strategy to explore opportunities to expand its international asset base in regimes with attractive competitive terms.
“The company hopes to leverage its organisational capabilities and expertise to create long-term value for the exploration and production business and for RIL on the whole.”
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