Reliance Industries, along with its partner BP, will give up three more oil and gas exploration blocks on the East Coast, won through domestic bidding.
The total number of blocks it holds will now come down to seven from 10.
RIL is surrendering two blocks in Mahanadi Basin and one in Krishna Godavari Basin. The blocks are KG-WN-2004/4, MW-DWN-2004/1, and MW-DWN-2004/2.
The company said this was in keeping with the Reliance-BP policy of “Where there is no prospect, exit.” Besides, Reliance’s revenue from the exploration and production business has fallen significantly, mainly because of drop in output from its KG-D6 block.
Falling revenue
In fiscal 2013, revenues from oil and gas exploration and production (including assets acquired outside domestic auction), fell 35.8 per cent to Rs 8,280 crore from the previous fiscal. The oil and gas business’ contribution to RIL’s revenue halved from 3.8 per cent of the total revenue to 1.9 per cent.
Last month, the company had written to the Directorate General of Hydrocarbons (DGH) about its intention to surrender three blocks won in the sixth round of the New Exploration Licensing Policy (NELP VI). Reliance had not started any drilling campaigns in these blocks.
Streamlining portfolio
Investments made in these blocks were mainly to undertake technical studies, data collection and processing of data required for assessing the prospects in an area.
The official said the decision to surrender these blocks was made at the end of the first phase of the exploration period, and thus did not raise any regulatory issues.
Reliance, in its investor presentation for fiscal 2012-13, said that as part of high grading of its exploration and production portfolio, it had been relinquishing blocks. In 2012-13, it gave up seven blocks.
At present, its portfolio is one producing asset, KG-D6, and the remaining discovered assets. Of the remaining seven NELP assets, BP is its partner in six. These blocks are in Gujarat Saurashtra, Krishna Godavari, Cauvery, Cambay and Mahanadi basins.
In 2011, BP had bought 30 per cent stake for $7.2 billion in 21 blocks of RIL. The actual deal between RIL and BP was for 23 blocks, but due to technical reasons, the Union Cabinet had approved partnership in only 21 blocks.
The two companies have since been working on an exploration and development campaign that will efficiently target high-quality prospects, an official said.