Two months after Reliance Industries bought a 40% stake in US-based Atlas Energy's Marcellus Shale gas operations for $339 million, the Mukesh Ambani-led company has now set its eyes on a joint venture with Pioneer Natural Resources.
The Texas-based Pioneer had said last month that it expects to zero in on a partner for its Eagle Ford shale gas assets by the end of June. Pioneer Natural Resources has about 3.10 lakh acres in the Eagle Ford region in south Texas. It tested its first successful well in last October and the second one in January this year.
Reliance is not the only company chasing shale gas assets globally. Companies from Exxon Mobil to France's Total to Royal Dutch Shell have all been betting on natural gas properties and have been investing billions of dollars in shale gas deposits.
‘‘Shale gas represents a growing source of energy and is expected to constitute 20% of the overall gas production in the US over the next 10 years,'' Alok Agarwal, chief financial officer at Reliance Industries, had told reporters while announcing the company's deal with Atlas in April.
He had also said that the company is looking at opportunities emerging in the US unconventional gas business. Extracting gas from shale rock formations is speeding up in the US, which wants to reduce its dependence on Middle-East oil and energy players are expecting better price realisations for cleaner fuel as the world is increasingly becoming environment conscious.
For RIL, funding a possible transaction with Pioneer is not a problem as it is sitting on cash to the tune of $4.7 billion as on March 31, 2010. It forayed into the shale gas business through a joint venture with Atlas.
Apart from $339 million for the 40% stake in Atlas' shale gas arm, Reliance said in April it is investing an additional $1.36 billion towards the field's development. The deal valued the 3-lakh acres in the Marcellus Shale region in southwestern Pennsylvania at $14,167 an acre.
Apart from shale gas, RIL is also simultaneously drawing up plans to enter the power and telecommunications sector in India after being freed from a non-compete agreement with his younger brother, Anil controlled Reliance-ADA group, that barred the energy-to-education conglomerate from investing in certain businesses like power, telecom and financial services.
Reliance Industries may look at coal-based power stations and nuclear energy and hasn't ruled out entering the lucrative corporate bandwidth market. According to industry sources, RIL could leverage on the optical fibre cable network that has been laid out to connect its refineries, retail outlets and petrol pumps to offer telecom services such as broadband. Another option is to acquire companies.
Media reports suggest that RIL is looking at acquiring the two-year old Infotel Broadband Services. Another prospective candidate is the Rs 1,967-crore Tulip Telecom. It is also widely speculated that Reliance Industries may waltz with Venugopal Dhoot-led telecom arm, Datacom Solutions. When contacted by TOI, Dhoot declined to comment.
Source: Economic Times__________________________________________________________________________________