Financial Daily from THE HINDU group of publications
Saturday, Aug 03, 2002
Reliance to complete Phase I K-G basin drilling by Dec
MUMBAI, Aug. 2
BY December-end this year, Reliance Industries Ltd (RIL) would have completed the first phase of drilling operations in the deep and choppy waters of the Krishna-Godavari (K-G) basin.
"Reliance will announce the outcome of its drilling operations this way or that," Mr Mukesh Ambani, Chairman and Managing Director, RIL, told Business Line on Friday.
The drilling operations are an important part of RIL's exploration and production plans, which are, in turn, parts of the three-pronged growth focus upstream oil and gas, retail integration of the oil business with its Jamnagar refinery and the ambitious infocom plans.
Mr Ambani said RIL had begun its drilling operations on the most challenging wells in the K-G basins off the eastern seaboard at a depth of 700 metres, a feat no other drilling company has been able to accomplish. After the seismic surveys the company opted to go for exploratory drilling and is operating 11 wells.
Over the last many years, Oil and Natural Gas Corporation and a few other MNCs walked out of the basin after having failed to source crude.
The K-G basin in the Bay of Bengal is considered one of the toughest sites to probe for oil on account of the swift currents, moving sands and high waves.
Mr Ambani said exploratory drilling was continuing even today when normally such activities would halt during the monsoon. "We decided to take the toughest first," said the new Chairman with a smile.
By the end of the drilling programme, RIL would have invested Rs 1,500 crore in charting 200,000 sq. km won in the first round of the New Exploration and Licensing Policy last year.
"While oil security will be one of the focus areas, the next challenge will be to integrate a marketing infrastructure with the refining business by April 1, 2004," Mr Ambani said.
The integration will essentially be carried out through a network of 5,849 retail outlets to be set up by RIL, all on its own.
"We will go ahead with our retail plan, irrespective of whether we take over any public sector oil company," he said referring to the proposed bid for disinvestment of HPCL and BPCL.
The execution of the retail plan alone would involve a spend of Rs 3,000-4,000 crore. Work on the retail network will begin in October next year and will be completed by March 2004.
The proposed RIL retail chain will match the quality culture of MNCs such as McDonalds. "It will be an uniform experience all over India, with quality customer service," he said.
But any extra oil availability combined with a strong retail chain in the oil business could also see the need for enhanced capacity at the 27-million-tonne Jamnagar refinery.
"We are running at a capacity of 30 million tonnes and can easily go up to 50 million tonnes. Such an expansion will require not more than 18 to 24 months from the day we decide on capacity expansion. And that too, at a relatively small investment of up to Rs 3,500 - 4,500 crore," Mr Ambani said.
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