The Hindu : Business : RIL to invest $4 b to tap hydrocarbon potential

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Saturday, Oct 13, 2007
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Business

RIL to invest $4 b to tap hydrocarbon potential

Special Correspondent

Krishna-Godavari gas production in the second half of next year

— PHOTO: PAUL NORONHA

ON EXPANSION BINGE: Mukesh Ambani (centre), Chairman, Reliance Industries, with his mother Kokilaben Ambani (right), and his wife Neeta at the company’s annual meeting in Mumbai on Friday.

MUMBAI: Reliance Industries Chairman, Mukesh D. Ambani, on Friday said the company’s Jamnagar refinery project is expected to be completed ahead of schedule at nearly half the capital cost of international refineries of similar size.

The company will build at Jamnagar, by 2012, world’s largest integrated combined cycle coke gasification complex with a capacity of six million tonnes a year.

“Reliance will be investing $4 billion of risk capital in the coming years, over and above the $2 billion already invested, to realise hydrocarbon potential of India,” said Mr. Ambani while addressing the company’s 33rd annual general meeting. The first gas discoveries in Krishna Godavari are expected to be in production in the second half of 2008-09.

The gas production rate will be equivalent to about half a million barrels of crude oil per day, representing 30 per cent of India’s current oil import. At current prices of gas and crude oil, according to Mr. Ambani, this means a savings of Rs. 36,000 crore ($9 billion) annually, with multiplier effect on the Indian economy.

The company is targeting 10 billion barrels of oil equivalent of 2P (proven plus probable) gross reserves globally. It is expanding its oil and gas portfolio outside India. The oil and gas upstream footprint of Reliance now spans the globe — Oman, Yemen, Colombia, East Timor, Northern Iraq and Australia.

In the pilot phase, Reliance Retail has opened 300 stores in 30 cities and 12 States. Since its launch in November 2006, 300 stores have been opened. “Organised retail initiative is to gain momentum once the benefits are fully understood,” Mr. Ambani added.

The company is extending its growth model to forge new partnerships such as those with Chevron in the Jamnagar refinery expansion project and with world leaders in consumer products in organised retailing.

Marketable securities with Reliance, including investments in Reliance Petroleum, have a value, at current market prices, of about Rs. 110,000 crore ($28 billion). “This gives Reliance the ability to pursue organic and inorganic growth opportunities of significant scale and size in the future.”

Innovation

Acquisitions-led strategy already in place with recent acquisitions in Malaysia and Africa are part of this. Expansion of paraxylene capacity from 1.9 million tonnes to 4.5 million tonnes annually will give Reliance 15 per cent of global paraxylene capacity.

“Given its imperative to invest in innovation, RIL will be building a Reliance Centre for Technology at Navi Mumbai to go with an Innovation Council at Pune which will have several Nobel Prize winners and global thought leaders.”

In the last five years, Mr. Ambani said, Reliance shareholders have seen the value of their stock growing exponentially. Between March 2002 and October 11, 2007, the market capitalisation of the company grew from Rs. 41,989 crore ($8,604 million) to Rs. 382,259 crore ($97,267 million).

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