In a bid to de-risk its capital-intensive exploration and production (E&P) business, Reliance Industries Ltd (RIL), India’s largest private sector company, is planning to join hands with global oil majors like BP, Chevron, ExxonMobil and Shell for ultra deep sea drilling in India.

?In India, 76% of gas reserves are in challenging deepwaters where risks associated are several times higher,? says PMS Prasad, president and CEO, Reliance’s petroleum division. Almost 83% of RIL’s exploration acreage is in deepwater, with 15% in shallow water and the remaining 2%, onshore.

The company has already invested Rs 9,000 crore in E&P and has committed another Rs 9,000 crore next year, but the global success ratio in E&P business is only 16-17%.

?We have already surrendered 11 blocks, of which 3-4 are deepwater blocks,? says Prasad. ?When we go into ultra-deep water, we may go for risk-sharing through tie-ups with those companies that possess a lot of learning and technology in the field,? he added.

In the E&P business, costs have been escalating across the entire supply chain. In the period 2004-06, cost of deepwater rigs and services, as well as installation costs have risen close to 300%.

Cost of seismic surveys has gone up 100% during the period, while that of steel and equipment has risen 75%.

Project management and engineering and fabrication costs are up around 50%. Add to this technical manpower shortages and huge backlogs with vendor shops, E&P has become a risky proposition.

?RIL is spending $2.5 million on three rigs alone,” says Prasad, to illustrate the high costs involved.

?Most of the opportunities in India are in deepwater. However, unlocking the deepwater potential is challenging.?

RIL is the largest holder of acreage under exploration among private sector companies in India with 36 domestic exploration blocks covering an area of about 384,000 square kilometers. It also has 5 coal-bed methane (CBM) blocks covering an area of 4,000 square kilometres.

RIL is also expected to bid jointly with Chevron for exploration blocks in the seventh round of the new exploration licensing policy (NELP VII).