RIL turns its attention towards oil in Venezuela

Reliance Industries Limited (RIL) is continuing in its expansion and ambitious growth plans in the Oil & Gas sector. The MukeshAmbani owned company is contemplating picking up a 11% stake in one of Venezuela’s biggest petroleum projects. This would undoubtedly strengthen relations between the oil rich South American Country and its biggest Indian customer.

RIL operates the world’s biggest refinery complex in Jamnagar, Gujarat. 80% of the industry giant’s revenues come from refining. The company aims to get cheaper, heavier crude oil for its refineries so as to eventually increase its margins.

The Latin American Nation of course has some of the biggest deposits in the world. RIL has been a big customer of the country’s crude oil and Venezuela is in fact the largest supplier of crude oil to the same. In 2012, the company signed a 15-year deal to buy up to 400,000 barrels per day (bpd) of heavy oil from its state-run oil company, Petróleos de Venezuela S.A. (PDVSA.)

Swagat Bam, SVP at RIL was quoted as saying, “We are looking to participate in the heavy oil upgrades project and a farm-in in the Carabobo-1 block, taking over the participating interest of Petronas,” at the Petrotech conference. Reliance is also examining entry into the Ayacucho-8 block in a joint venture with PDVSA, Bam said.

Venezuela’s oil fields have garnered interest from many oil majors around the globe. According to sources, disputes between the Malaysian company Petronas and, Venezuelan authorities and PDVSA led to the Asian Firm exiting the Petrocarabobo project in Venezuela’s Orinoco belt. The project also had equity from Repsol of Spain and three Indian Oil Companies – ONGC, Oil India and Indian Oil Corporation. The project planned to invest around $20 billion over 25 years and involves building a 200,000 barrel per day upgrader to convert heavy crude into light crude oil.

RIL has also been keen to establish its presence in Mexico after a change of regulatory stance in the North American country. However, there are no firm plans to do so as of now according to officials. Reliance currently buys 60,000 bpd of oil from Mexico. In December, Mexico’s Congress voted to open up its oil and gas sector to private investment in the biggest overhaul of the industry since it was nationalized, as the country seeks to revive flagging output. Bam, commenting on the same was quoted as saying, “Our working relationship with petroleum regulators and NOCs (national oil companies) in LatAm countries has always been exemplary and this has given us great sense of confidence.”

Reliance, India’s largest private sector company by revenue, has seen a sharp fall in output at its KG D6 gas block off the east coast, since 2010, raising investor concerns over its exploration business.Its overseas exploration business mainly comprises stakes in three shale gas joint ventures in the United States that it acquired in 2010.

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