Similarly, excerpts from Niko’s 2008 annual report on their website had said locations will be selected as early as mid-2009 and drilling would follow soon after. But in its update to investors on 13 February, Niko said that selecting the location of the first well would only be by mid-2010.
A 17 September 2007 report by Macquarie Research had stated that the MN D4 block “may even dwarf KG D6” and presented significantly greater potential.
RIL’s president and chief executive, petroleum, P.M.S. Prasad, had said in February that the company had three deep water rigs at work and wanted five more, but was expecting only three to be available due to a shortage.
Explaining that rig rental rates had not fallen much and availability continued to be a hurdle despite a slowdown in exploration worldwide due to the recession, Prasad had said demand might have gone down but availability had declined even more because of lack of financing for new deep water rigs.
Prasad had also confirmed that RIL had contemplated manufacturing deep sea drilling rigs but had “stepped back from the idea” for now.
The Mukesh Ambani-owned RIL seems to have its hands full—and capital committed—with gas production commencing from a few wells in KG D6, further exploration in the rest of the block, and efforts to relaunch its domestic petrol retailing venture.
The oil-to-yarn conglomerate has sought regulatory approval to invest an additional $5.91 billion (Rs29,633 crore) in nine more discoveries in KG D6 block and link them to the ones already in production. It also plans to bid for $15-20 billion worth of oil projects in the Venezuelan Carabobo region along with ONGC Videsh Ltd and possibly Indian Oil Corp. Ltd (IOC).
Last week, RIL surrendered its export-oriented unit tag for the older Jamnagar refinery, with 660,000 barrels a day capacity, as a possible preparation for selling crude distillates such as petrol and diesel in the domestic market through a joint venture being discussed with IOC. RIL’s shares have risen 39% this year, outperforming the bellwether Sensex index, which has increased by about 14%.
This has prompted research and brokerage firms such as UBS, Kotak Securities Ltd and Sharekhan Securities Ltd to say in the past week that the current stock price factors in all the positives but not the risks.
On Monday, RIL shares fell by Rs3.80 to close at Rs1,713.70 on the Bombay Stock Exchange, while the Sensex ended nearly flat at 10,979.50 points.
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