Reliance Industries has signed an oil exploration-to-refining deal with Mexico’s national oil company Petroleos Mexicanos as it looks at overseas opportunities to overcome disenchantment back home.
RIL and Petroleos Mexicanos (Pemex) will look at potential upstream oil and gas business opportunities in Mexico as well as explore international markets for “value added opportunities,” a company statement said.
The deal comes as Mexico, the world’s tenth-largest crude producer, opens up its energy sector with the ending of Pemex’s decades-long monopoly. State-owned Oil and Natural Gas Corp (ONGC) had previously signed a MoU with the Mexican firm.
RIL, the owner of the world’s biggest refinery, said its tie-up with Pemex was in line with its strategy to expand its international asset base in regions with “attractive competitive opportunities.”
A memorandum of understanding (MoU) was signed by RIL’s oil and gas head P M S Prasad and Pemex chief executive Emilio Lozoya in New York.
RIL, which entered into the oil gas business in 1990s with the setting up of the nation’s biggest refinery at Jamnagar in Gujarat and then expanding into upstream oil and gas exploration, is re-orienting its hydrocarbon business after encountering several challenges.
Out of 45 oil and gas exploration areas or blocks it acquired in India since 1999, as many as 38 have been surrendered after having sunk USD 2.09 billion.
In spite of 52 oil and gas discoveries since 2002, it has managed to bring only three of them into production to date as it ran into regulatory hurdles, pricing and cost recovery disputes and delays in getting critical approvals.
RIL has since then started looking for opportunities overseas – from Myanmar to Mexico. In May this year, it bagged two shallow water exploration blocks in Myanmar and is in talks to take properties in Venezuela, Brazil and Gulf of Mexico.
As per the Memorandum of Understanding (MoU) “RIL will cooperate with PEMEX for assessment of potential upstream oil and gas business opportunities in Mexico and jointly evaluate value added opportunities in international markets,” the statement added.
RIL and PEMEX will also share expertise and skills in the relevant areas of oil and gas industry, including for deep-water oil and gas exploration and production.
“The MoU envisages sharing of RIL’s pioneering expertise in deep-water development and best practices in East Coast of India and RIL’s experience in shale gas in United States,” it said.
RIL will also provide technical support and share experience with PEMEX for refining value maximisation and other technical optimisation strategies.
“RIL’s cooperation with PEMEX is in line with its growth strategy to explore opportunities to expand its international asset base in regimes having internationally attractive competitive terms.
“The company hopes to leverage its organisational capabilities and expertise to create long-term value for Exploration and Production Business and for RIL on the whole,” it added.