Reliance to pay Atlas $1.7 bln for Marcellus stake | business | Hindustan Times
Today in New Delhi, India
Jan 18, 2017-Wednesday
New Delhi
  • Humidity
  • Wind

Reliance to pay Atlas $1.7 bln for Marcellus stake

business Updated: Apr 10, 2010 08:53 IST

Highlight Story

Indian energy giant Reliance Industries will pay $1.7 billion to form a joint venture at one of the most promising natural gas deposit regions in the U.S. with Atlas Energy, becoming the latest foreign company to invest in shale plays that are expected to be very lucrative.

Reliance, controlled by billionaire Mukesh Ambani, has been working hard to expand its presence outside India, break into new markets and broaden its various businesses including refining, oil and gas exploration and petrochemicals.

India's largest listed firm will pick up a 40 percent stake in Atlas's operations in the booming Marcellus Shale -- a gas project that spans parts of Pennsylvania, West Virginia and New York in the United States and which, according to some geologists, could hold enough natural gas to satisfy U.S. demand for a decade.

With this move it joins a number of international oil companies including BP Plc, Total, Statoil and Mitsui & Co who have bought into shales, rock formations that could hold vast amounts of natural gas.

While the shale formations have proven to be lucrative, they are also very expensive to develop and environmentally sensitive. The joint ventures have given the independent oil companies who own much of the acreage in these areas access to capital and should allow foreign oil companies to pick up expertise in new drilling techniques developed for the shales.

"This marks Reliance's foray into a totally new venture altogether. Reliance is going to generate a lot of cash flows going ahead and investments in shale gas could be a good growth opportunity," said Deepak Pareek, oil and gas analyst with Angel Broking.

Reliance Chairman Ambani, who according to Forbes is the world's fourth-richest man with a net worth of $29 billion, has made no secret of the firm's overseas ambitions as the company has raised a war chest of $2 billion by selling stock in recent months.

But Reliance, founded by Ambani's father Dhirubhai, a school teacher's son, had not met with much success until now in its foreign takeover attempts.