Reliance losing interest in Indian upstream

Vol 14, PW 8 (07 Oct 10) People & Policy
     

Much patriotism was on display in Delhi this week at the controversial and poorly organised Commonwealth Games.

Expect more of the same at the Landmark Hotel in London’s Marylebone district tomorrow morning (October 8) at an informal NELP-IX meeting with investors, as top Reliance and Cairn executives help oil minister Murli Deora hype India’s investment climate. In reality, though, Reliance looks as if it’s losing interest in India’s upstream sector.

It made little effort to bid in NELP-VIII and we can expect a repeat non-performance for NELP-IX. This is not terribly surprising, as the quality of blocks on offer in Indian licensing rounds has steadily deteriorated since NELP-I.

In the last (NELP-VIII) round, only 36 of 70 blocks attracted bids. Add to this the Indian government’s anachronistic policy of fixing the D6 gas price and choosing customers in flagrant disregard of the marketing and pricing freedoms enshrined in the PSC.

“Reliance may be the operator,” says an industry source, “but it has no control over even a single molecule of D6 gas.” Then there are growing rumours the government is pushing hard for more LNG imports to India, for reasons best left unsaid.

In what could be argued as a blatant conflict of interest, oil secretary S. Sundareshan is also chairman of the country’s oldest and biggest LNG importer, Petronet-LNG.

Some believe this explains the ministry’s drive to introduce a market for LNG in India through a proposed ‘uniform gas pricing’ regime. Sundareshan recently mortified Reliance when he ruled out raising the price of D6 gas before 2014, during a visit to Mumbai on September 11 (last month).

And don’t forget the DGH, which constantly slaps Reliance’s wrist for the dumbest of reasons, most recently on September 1 when it “disqualified” a fourth gas discovery at KG-DWN-2003/1 because DGH officials weren’t present to witness testing (!)

LNG Summit