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RIL in makeover mode, plans $5 bn investment

Mukesh Ambani-controlled Reliance Industries Ltd (RIL) is working on an ambitious two-year plan to overhaul the global image of the textiles-to-oil conglomerate. HT reports.New Horizons

business Updated: Jan 04, 2011 01:26 IST

Mukesh Ambani-controlled Reliance Industries Ltd (RIL) is working on an ambitious two-year plan to overhaul the global image of the textiles-to-oil conglomerate. It has appointed consulting firms AT Kearney and Booz & Co to suggest a suitable blueprint for the transformation, industry sources said.

An RIL spokesperson maintained “no comments” on this development, industry sources said the company along with its consultants is finalising a $5 billion (R22,500 crore) investment plan that may begin as early as next financial year.

Besides, the RIL may also look at some consolidation, which includes selling stakes in some exploration and production blocks. Sources said RIL has revived its talks with global oil major BP and plans to sell its stake in E&P assets. The RIL spokesperson said, “Talks with BP are on but are slow.”

“The investment plans of RIL could includes a $1.2 billion liquefied natural gas (LNG) terminal besides expansion of its refinery and petrochemical facilities,” the sources said. “RIL is mulling the establishment of a LNG import terminal on either the East or West Coast to meet demand at its refineries and petrochemical plants.”

RIL already has two mega world class refineries at Jamnagar in Gujarat with a combined capacity of 1.24 million barrels per day.

Reliance also has a strong foothold on the gas front and is already producing 60 million standard cubic metres per day (mmscmd) from its KG-D6 gas field, off the Andhra coast. Setting up an LNG terminal will help the company in importing and selling gas. The company had contemplated setting up the liquefied natural gas (LNG) import terminal as early as 1997. However, it shelved plans for the 5 million tonnes-per-annum port terminal at Jamnagar and a plant for re-gassification of the LNG.

The compelling reason for Reliance to re-evaluate the prospects for a LNG terminal was its inability to use the natural gas that it produces from the eastern offshore KG-D6 field, as its twin refineries at Jamnagar have been allocated just 2.34 mmscmd out of the 60 mmscmd of gas that the government has earmarked for various users.

Reliance, the source said, is buying one LNG cargo a month from Royal Dutch Shell at prices that are in double digits, as against a delivered price of $7 (R315) per million British thermal units of KG-D6 gas. Reliance had in December, 1997, got government approval to raise R1,150 crore through the issue of global depository receipts or American depository receipts and through private placement to part-fund the proposed Jamnagar terminal.

In May, 2000, RIL had signed a deal with the National Iranian Oil Co (NIOC) for a 7.5 million tonnes-per-year LNG plant in Iran. The company was to take a 25% equity stake in the $3.5 billion project and in return, get to take home 2.5 million tonnes of LNG.

However, that plan was shelved in 2002 when Reliance discovered massive gas reserves in the KG-D6 field in the Krishna-Godavari Deepwater Basin, off Andhra Pradesh. Last year, RIL had expressed interest in taking on lease the LNG terminal adjacent to the Dabhol power plantwhen the 5 million tonnes-per-year facility comes onstream later this year.