RIL Streamlines Its Overseas Oil And Exploration Business By Consolidating Its Activities To Limited Regions

RIL (Reliance Industries Limited) , India ‘s second largest company by revenue in the country has taken the plunge to systemize its activities with respect to its Oil and the Gas blocks overseas after examining its exploration and production strategy (E&P). RIL presently has seven blocks overseas reducing from the count of 12 that it dealt with.Thiscompany mentions it to be a deliberate decision with the intention of streamlining its activities and effectively managing its resources. RIL intends to confine to one or two regions and increase the size of these investments in these areas in order to leverage its operations in this field. Previously, it had its exploration acreages across the world from Peru to Australia. However, it wishes to reorganize its strategy and switch to consolidation that will enable the company to manage its resources even more effectively. Besides, it now intends to attain participating interests in areas that it entails to, already.

Anonymous sources who are tracking the move mentioned that it was more expensive and unfeasible for them to invest and operate shattered businesses in different parts of the world than infusing a huge investment in one or two regions and clinging on to them.

Previously, this Mukesh Ambani led conglomeratecatered to acquiring exploration acreages in order to redeem from the premium for participating interests in the already developed fields. To liberate itself from this cost i.e. premium, it embarked upon the acquisition of exploration acreages. They have bought most of them through the bidding rounds. The company also wishes to relinquish its activities (exploration acreages) from the no- contact zones as it usually makes the process strenuous leading to ineffectiveness.

RIL wishes to adopt a strategy similar to its shale gas operations in the USA, where it has been a gratifying experience for them. Its cumulative investments in shale gas assets in US accounts for more than $ 3.5 billion. It presently has seven overseas Oil and gas blocks through its Reliance Exploration & Production DMCC arm, which includes two in Yemen, two in Peru, one in Australia and two in Columbia. In addition, it has a uranium exploration block in Australia and shale gas assets in the US. It has withdrawn from acquisition and operations of its exploration blocks at East Timor, Oman and Yemen where it had one block each and Kurdistan where it had two blocks.

According to AashishMehra who is the Partner and Managing Director of Strategic Decisions Group, which is a US based strategy consultation firm, the company’s exploration and production business is a decision-orientedbusiness unlike the other segments. With respect to this segment, it is not possible for one to intensify the effectiveness of a poor decisionwith its smart implementation. Hence, the top management of the company must be delighted of this move and recognize its significance.

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