Around 514 wells drilled by 2012 end.
By R. Chandrasekaran
CHENNAI: One of India’s biggest business conglomerate Reliance Industries Ltd. is planning to infuse an additional $5.1 billion in its US shale gas businesses during the next three years. This will take the total investment in the shale gas to about $10.8 billion.
The company, which is controlled by billionaire Mukesh Ambani, purchased the U.S. gas assets in 2010 by paying $3.45 billion through its subsidiary Reliance Holdings USA. Till the first quarter of the current fiscal year, Reliance Industries has spent $5.7 billion in gas joint ventures in the U.S.
Interestingly, during the just concluded June quarter, the company recorded 84 percent jump in revenue from the U.S. shale gas venture on higher production. Till 2012 end, approximately 514 wells were drilled and an analyst is reportedly expects Reliance to drill 3,846 wells by spending another $5.1 billion before 2016.
The company’s gas shale business consists of three joint ventures for upstream projects with Chevron, Carrizo Oil and Gas and Pioneer Natural Resources. While Reliance stake in Atlas Energy is 40 percent, its stake in Pioneer Natural Resources is 45 percent and in Carrizo Oil it is 60 percent.
The Mukesh Ambani-controlled business is also not ignoring the domestic front. This is quite evident from the way they have told the analysts that once the government gives its nod on the gas price increase, it will start the progress in the eastern offshore of Krishna-Godavari basin block.
The Indian government has decided recently to increase gas price to around $8.4 – $8.5 a unit from $4.2 a unit now with new mechanism. The government also indicated that it was in favor of the Rangarajan Committee proposal on gas price increase. However, Reliance Industries is waiting to get official notification from the government.
The company has recently announced its quarterly numbers that came in line with the Street predictions. However, the stock closed 1.6 percent lower in the Bombay Stock Exchange. At one point of time, shares of the company dropped 2.7 percent.
To contact the author, email to rchandrasekaran@americanbazaaronline.com