Exxon talks with Reliance over KG block in trouble

Vol 9, PW 9 (11 Aug 05) People & Policy

Reliance denies it but that hasnt stopped the rumour gaining ground: that its talks with US major ExxonMobil for a stake in KG-DWN-98/3 are in trouble.

Two critical issues appear to be blocking progress. One, Exxon wants to be operator but Reliance opposes this.

Two, Exxon is unhappy with the burner tip price of $2.97 per mmbtu that Reliance has agreed with NTPC, arguing that this significantly diminishes the value of the asset, and with it Reliances asking price. Exxon is believed to have told Reliance it should make up the difference between the $2.97 offered to NTPC and todays significantly higher market price when calculating the assets value.

Another unresolved issue centres on Exxons wish for a majority stake, also opposed by Reliance, which holds 90%, with Niko Resources of Canada holding 10%. Exxons exploration team in London is believed to be leading talks with Reliance but contacted by this report, company spokesman Robert Harris in Houston would only say: ExxonMobil will pursue profitable business opportunities if they arise in India as in any country.

We do not comment on particular future business opportunities that ExxonMobil may or may not be considering. Reliance offers a more robust response.

Do you honestly think wed be talking to someone about an issue like this while the groups assets are being divided up The last year has been totally taken up with internal corporate affairs. But is Reliance talking about farming-out a stake in its KG basin discovery Since we made this discovery there isnt a single global oil major that hasnt talked to us.

More than ten companies approached us. We met them all and talked to them all.

But its not right to say that talks with any single company broke down on any specific areas. What are Reliances plans for KG-DWN-98/3 now We are going to develop this field on our own.