Dhirubhai Ambani was against farming-out D-6

Vol 10, PW 23 (22 Mar 07) People & Policy
     

Companies interested in a slice of Reliance’s prolific D-6 block should take a reality check.

Reliance might be talking to potential suitors and might even be encouraging others to show interest. But eventually it won’t select any of them.

“The truth,â€‌ says a source, “is that Reliance won’t share D-6 with anyone.â€‌ Our source narrates a revealing anecdote to support his extraordinary statement.

This dates from when Reliance founding father and patriarch Dhirubhai Ambani was alive. At that time Shell was actively courting Reliance to farm-in to D-6.

“Shell held a series of meetings with senior Reliance management including Dhirubhai’s sons Mukesh and Anil,â€‌ we hear. “Almost everything had been agreed, price, percentage of the farm-out etc.

Only the final approval of the old man (Dhirubhai) remained.â€‌ Wanting to get this out of the way as soon as possible, top Shell executives met Dhirubhai Ambani.

During the meeting, he was taken through the proposed deal. Dhirubhai heard them out patiently but when his turn came to speak said the deal would not happen.

To the shock of Shell executives, Dhirubhai Ambani told them that for D-6, his sons had no authority to take such a decision. He said only he would take such a decision for D-6.

“That was the end of that courtship,â€‌ we are told. “Both sons got the message from the father that nobody should be allowed into D-6.

â€‌ Mukesh Ambani (who now runs Reliance Industries) was selected by Dhirubhai as his successor, “and will not do anything (about D-6) which his father would have disapproved of.â€‌ So why is Reliance even talking to anybody “Reliance loses nothing by talking to other companies,â€‌ we hear.

“They’ll share all data with these companies.â€‌ In turn, these companies “deploy their best brains to evaluate the data and go back to Reliance validating the reserves estimates or even upgrading them with newer data.

â€‌ Reliance gets the satisfaction, repeatedly, “that it had made the right decision choosing this blockâ€‌ and does not have to spend any money for confirmation by the top companies in the business.