One of the India’s leading oil companies, Reliance Industries Ltd. is planning to explore oil and gas resources in Latin America. Reliance is expected to start drilling at two sites soon. This project is a part of Chairman Mukesh Ambani’s vision of developing a worldwide energy business.
Atul Chandra, president of the company's international business said that “We are seeing two projects in Latin America and looking at a majority stake in one of them and will be the operator in at least one of them,”
According to sources, billionaire Ambani is looking forward to invest overseas to reduce the impact of state regulations on domestic gas, diesel and petrol prices. Reliance is going to complete the world’s biggest refinery complex this year. All the output is reserved for export.
India’s biggest non-state refiner is planning to extract oil and gas from Krishna Godvavari basin area at some time later this year. Work has also commenced on projects to build and own rigs after there were certain delays while acquiring important drilling equipment.
Chandra said that “We are certainly considering entering the oilfield services business. We are looking at the end of this fiscal or the beginning of next fiscal and haven't started talks with partners as yet”.
The company is aiming to produce 80 million cubic meters of gas a day from the Dhirubhai 1 and 3 fields during the first year of operation. This will double India’s output, Ambani reported in October. Oil output from this area is predicted to reach the highest levels of 40,000 barrels a day.
However Reliance is also facing losses at home. They have decided to close 950 gasoline and diesel pumps out of its 1,250 outlets according to Reliance’s president for planning and business development.
Partha Maitra told reporters “We are losing money in retail and that is a sore point,'' at an industry conference in Mumbai, where the company is situated. Further adding, all company-owned outlets would be closed.
Reliance has faced some steady losses ever since it gained a government permission to extend its business into fuel retailing in 2002. These losses have been largely due to government controlled rivals who are selling fuel at lower costs under government orders. India after struggling through a three years of high inflation and almost record crude costs, is trying to undo losses at Indian Oil Corp. and other government controlled refiners by issuing oil bonds.
Losses on retailing oil products compelled Reliance to stop sales at its different outlets. This had reduced its market share to 2 percent in September 2006 from 13 percent in April of that year, according to the company. However, its market share again rose to 6.3 percent in March 2007.
It is expected that refiners’ losses may rise to staggering 1.3 trillion rupees in the year that will end in March 2009 as reported by Press Trust of India on April 3. There was an estimated loss of 718 billion rupees ($18 billion) from selling fuel below cost, in the year that ended on March 31 according to Oil Secretary M.S. Srinivasan.
Currently Reliance runs a 660,000 barrel a day refinery in Jamnagar in the western state of Gujarat. However, it also plans on developing a 580,000 barrel a day plant under unit Reliance Petroleum Ltd. This joint facility will be the world’s largest refinery, according to the parent.
The refiner had asked for a one year extension of export oriented unit status for its present refinery from the government, Maitra added. However, export benefits for the plant are going to last till the end of March 2009. These benefits are largely in the form of tax breaks.