Reliance Petroleum emerges آ‘The Big Winnerآ’ under NELP

Vol 3, PW 25 (19 Jan 00) Exploration & Production

The biggest winner of the licensing round is clearly Reliance Petroleum, which appears all set to realise its ambition of becoming a major player in Indias upstream sector.

But what of Reliances partner, the Calgary-based Canadian explorer, Niko Resources Reliances choice of Niko as a joint venture partner continues to puzzle observers. A senior Niko representative is presently in India for talks with Reliance and the Indian oil ministry about a number of issues, among them the status of the companys exploration alliance with Reliance under NELP.

At least two sources in Delhi tell this report that the oil ministry has its doubts about the longevity of Reliances alliance with Niko. We believe Reliance will drop them for a bigger player, a source tells Petrowatch.

This view is supported by an interview held by this report with Reliance spokesman Yogesh Desai in July 1998 in which Desai stated that Reliance would NOT be looking for a joint venture partner. That position became untenable last year when the Indian oil ministry issued a directive that any bidding consortium needed at least one member with operating experience.

For this Niko is eminently qualified. Although small, the company is one of the most successful foreign operators in India.

Its prize possession is the Hazira gasfield, which it operates in an alliance with Gujarat State Petroleum Corporation (GSPC). Niko is drilling the sixth in a 15-well development programme at Hazira, which produces 22m cubic feet a day (cf/d), and has estimated recoverable reserves of more than 1 trillion cubic feet.

Niko is also operator of the Bhandut, Sabarmati, Matar and Cambay small-sized gasfields. Bhandut has no activity, while Niko has told the oil ministry it wishes to relinquish control of Sabarmati and Matar.