RIL to invest $5bn over 10 yrs in US shale gas project | business | Hindustan Times
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RIL to invest $5bn over 10 yrs in US shale gas project

After multiple attempts to acquire North American assets in the recent months, Mukesh Ambani controlled RIL announced on Friday that it will invest $1.7 billion in a joint venture with the US based Atlas Energy Inc to produce gas from shale (sedimentary rocks) in the Marcellus region.

business Updated: Apr 09, 2010 22:00 IST
HT Correspondent

After multiple attempts to acquire North American assets in the recent months, Mukesh Ambani controlled Reliance Industries Ltd (RIL) announced on Friday that it will invest $1.7 billion (Rs 7,531 crore) in a joint venture with the US based Atlas Energy Inc to produce gas from shale (sedimentary rocks) in the Marcellus region.

RIL will invest an additional $3.5 billion in developing additional shale acreages over the next 10 years, taking its total investment commitment to $5 billion (Rs 22,150 crore).

“The financial commitment to this joint venture including development expenditure and carry is likely to be about $5 billion over the next 10 years.” RIL’s CFO Alok Agarwal said at a press conference in Mumbai.

Under its joint venture with Atlas Energy, Reliance will take 40 per cent stake in the about 300,000 acres in Marcellus shale gas project while the Nasdaq-listed Atlas will hold the remaining 60 per cent and also the operatorship rights.

The Marcellus shale gas project spans parts of Pennsylvania, West Virginia and New York and could hold enough natural gas to satisfy US demand for a decade, RIL said.

PMS Prasad, Executive Director, Reliance Industries said, "Reliance is very pleased to enter one of the fastest growing opportunities emerging in the U.S. unconventional gas business.”

Of its $1.7 billion investment, RIL said it will pay to Atlas comprises of $339 million (Rs 1,651 crore) in cash to Atlas to close the deal and $ 1.36 billion (Rs 6,025 crore) capital costs “over an anticipated seven-and-a-half year development programme.”

“The (300,000 acres) acreage will support the drilling of over 3,000 wells with a net resource potential of about 13.3 trillion cubic feet gas equivalent,” RIL said, adding that the deal is expected to be closed by the month end.