"RIL is looking for large shale gas assets, which will need investments of anywhere between $500 million and $2 billion," one of the bankers looking for assets said. The company has chosen not to appoint a specific investment bank, but has given indications to bankers to scout for such assets. "They have hinted at looking at assets brought to the table."
"We will not comment on market speculation," RIL spokesperson said in a email response. Shale gas will strengthen energy security for the US to a net exporter in several years.
RIl, which has more cash of R70,252 crore than its debt, has raised $1.5 billion as long-term loans through its US subsidiary Reliance Holdings USA. RIL had invested in excess of $3.5 billion for three shale gas assets in the US in the past few years.
The company has invested $2.14 billion in Pioneer shale gas fields, $1.04 billion in Chevron's shale gas field and $0.59 billion in Carrizo fields. "There has been been a seven-fold increase in RIL's share of gross production," the company told its shareholders on its website.
"Petroleum and refining, which will be the core of RIL, will be a capacity driven business with no chances of growth year after year," said Alok Deshpande, oil and gas analyst at Elara Capital, a brokerage. "In exploration and production, even with low investment, they can get a good find which can be their future growth avenues."
The US energy department is now accessing how exports could affect job creation, trade and domestic price of natural gas and is expected to release a report later this year. Some companies have been allowed to export gas in small quantities.
Cheniere Energy has been allowed to supply 3.5 million tonnes of liquid gas every year from 2017 to India's largest gas distributor Gas Authority of India. Other gas producers are pushing for exports.
The demand for gas could come from China, Japan and India. "China's large shale gas reserves could even be bigger than North America's, yet the country is arranging long-term natural gas supplies via ships and new pipelines," Peter Voser, Royal Dutch Shell's chief executive, said at an industry conference in Malaysia on June 5. "Between now and 2050, we see energy demand will double and gas will play a much larger role in meeting that demand."
The rise in Japan's demand is triggered by the closure of n-power plants following the 2011 Fukushima Daichi nuclear accident as it switches to gas to generate electricity. As India's demand for gas overshoots supply, many oil companies are scouting for gas field assets across the globe to reduce energy deficit.
On March 30, 2012, India's largest hydrocarbon explorer Oil and Natural Gas Corp signed an agreement with ConocoPhilips, America's third-largest energy company, to cooperate in areas including equity partnership in shale gas assets and deep water oil and gas exploration blocks. The Indian company will ride on the technological expertise of the US company.
RIL acquisition of shale gas assets have given them an early mover advantage with their peers in the US. One, it gives enough time to gain technological expertise and, two, prepare itself to bid for shale gas assets in India. Petroleum minister Jaipal Reddy told parliament on March 13, that his ministry is working on a strategic policy on shale gas assets and will be finalized by end of 2013 fiscal.
Chinese companies have invested roughly $17 billion in shale gas assets in the US to gain expertise before it starts exploring in their home country.
The Financial Express
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