After acquiring two offshore blocks through bidding, last year, the Indian energy giant, Reliance Industries Limited,has now inked a Production-Sharing Contract (PSC) with Myanmar Oil & Gas Enterprise, owned by the Myanmar government.
These blocks are situated offshore in Myanmar’s Tanintharyi basin. The depth of water in this basin is 3000 ft. and the total area covered by it is 27,600 sq. kms. As per the agreement, Mukesh Ambani-led Reliance Industries will act as the operator of the blocks. It will also acquire 96% of the participating interest.
Reliance Industries has taken this step to align with its business strategies. The company has plans to extend the reach of its asset base. It will be investing in varied overseas regions popular for its oil and gas resources. Reliance Industries will make optimum utilization of its expertise and capabilities, in this way which in turn, will help the company to create value in the E&P sector, a statement of the company informed. A spokesperson of Reliance Industries further added that, as the agreement has been signed, the company will now plan the schedule and start working on the blocks.
Performance of Reliance Industries
Although, domestic production and exploration business of Reliance Industries is facing some challenges, it is determined to expand the business overseas. Recently, its output from the Krishna-Godaveri Block 6 has been reduced. In December, 2013 the average output of KG-D6 in 3 months was 11.8 mmscmd of gas. In March, 2010, the same had reached as high as 70 mmscmd.The company is thus negotiating with the government on gas price and other issues.
In June, 2014, an annual general meeting of Reliance Industries was held. In that, the Chairman, Mukesh Ambani had specified the company’s goals to keep exploring the global opportunities. In the same year, Reliance Industries signed a deal with the national oil company of Mexico, Petroleos Mexicanos (Pemex). It aims to look for upstream oil and gas business opportunities in Mexico, through this deal. Besides, the company has also entered in the markets of Venezuela and Iraq.
Morgan Stanley presented a report yesterday, stating that the profits of Reliance Industries were constant for the past five years. The reason is cited as the reduction in the E&P production. To overcome this, the organization took up a capex cycle of $40bn for FY14-18. Out of this, $15.5bn will be used in the four vital downstream projects related to its refining and petchem business. “With around 70% of $40bn capex for F14-18 now behind, profits are finally set for a three-year compounded annual growth rate of over 15%,” the report said.
About Reliance Industries
Reliance Industries has now emerged as the nation’s biggest private sector business.The parent company, Reliance Industries Limited, is a listed company of Fortune Global 500. In the end of 1970s, the company started with business in textiles and later advanced to polyester, fiber, petrochemicals, oil and gas production and exploration, retail, infotel, etc. It ranks first in the world in the production of yarn and fiber. Besides, it also features among the top 10 globally, in major petrochemical products.