Reliance Industries eyes third US shale gas deal

Mukesh Ambani-run Reliance Industries Ltd (RIL) is close to finalising its third shale gas acquisition in the US. In what is being talked about as the company’s biggest shale gas deal so far, industry sources said RIL is in active talks to acquire a 50 per cent stake in a shale gas asset in North America. The acquisition is likely to be the biggest so far by IL, sources said.

In April, RIL had picked up a 40 per cent stake in Atlas Energy’s Marcellus Shale acreage for $1.7 billion, committing a capital expenditure of $3.5 billion over 10 years. For RIL, Marcellus is a strategic investment, as it is one of the most economically attractive unconventional natural gas resource plays in North America, due to low operating costs and proximity to the north-east gas markets in the US.

RIL picked up a 45 per cent stake in Pioneer Natural Resources’ Eagle Ford shale acreage for $1.3 billion in June. The deal was done through Reliance Eagle Upstream, an arm of RIL. Pioneer owns 46 per cent, while Newpeck holds nine per cent. Reliance Industries had agreed to make an upfront payment of $266 million in cash and contribute another $879 million towards Pioneer’s share of future drilling costs in the next four to six years.

Flush with revenues from its Krishna-Godavari (KG)-D6 gasfield back home, Mukesh Ambani’s RIL, sitting on cash reserves of close to Rs 22,000 crore has been on the lookout of acquisitions in US.

Shale gas extraction involves tapping natural gas trapped between layers of shale rock, similar to the extraction of gas from between coal seams.

More such acquisitions in shale gas projects in the US will follow, sources said. An RIL spokesperson refused comments on the development.

“Shale gas extraction is gaining momentum worldwide and especially in the US. An agreement is also expected to be signed between India and the US during the visit of US President Barack Obama later this year,” said a senior petroleum ministry official.

Besides acquisitions of shale gas assets by RIL in the US, ONGC is also likely to execute some agreements with US firms during President Obama’s visit to India.



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