Oil regulator's nod to RIL stake transfer

Written by Agencies | New Delhi, August 28: | Updated: Aug 28 2008, 23:12pm hrs
Oil regulator DGH has concurred with Reliance Industries' proposal to transfer 80 per cent of its stake in the D6 gas field to its four unlisted subsidiaries as the move was in line with provisions of the contract.

Reliance had about two months back proposed to transfer 80 per cent of its 90 per cent interest in Block KG-DWN-98/3 or D6 in the Krishna Godavari basin off the east coast and DGH had last month given its no-objection, official sources said.

The Directorate General of Hydrocarbons (DGH) scrutinized the proposal in light of the provisions of Production Sharing Contract signed for D6 that was awarded under the first bid round under New Exploration Licensing Policy (NELP) in 1999.

The proposal was in line with PSC provisions and DGH gave its no-objection to the Oil Ministry last month, they said.

Mukesh Ambani-run RIL currently owns 90 per cent stake in D6 where 18 oil and gas discoveries have been reported till date. The remaining is with Niko Resources of Canada.

It wants to transfer the stake to four unlisted wholly- owned subsidiaries to enhance flexibility to raise finances.

Subsequently, the ministry asked DGH to list instances where a company has assigned more than 50 per cent interest in a block to its affiliates.

The ministry, sources said, will process the application once DGH submits the list.

A company spokesperson said, "This is common global practice and would enable the company to enhance its financial flexibility as the company builds its exploration and production portfolio."

RIL is set to begin oil and gas production from D6 from next month, with peak out production envisaged at 40,000 barrels per day, while gas output is seen as 40 million standard cubic meters per day.