The international oil and gas ventures of Reliance Industries (RIL) have suffered losses, according to data in its 2010-11 annual report. Reliance Explorat-ion and Production DMCC, the holding company for international oil and gas blocks, has suffered a loss of Rs 881.63 crore. RIL’s three shale gas assets in the US bought a year ago have suffered a cumulative loss of around Rs 21 crore.

According to a senior company official, “Reliance Exploration and Production DMCC losses are due to the declaration of two oil blocks in the UAE as dry and void, while the shale gas losses are due to interest and other variable costs attached to the latest production from the assets.”

The annual report said that “the results following the drilling campaign in blocks Oman 18 and East Timor K have not been encouraging and, accordingly, the expenditure incurred on these blocks amounting to $177 million (Rs 807 crore) has been fully provided for the books of REP DMCC.”

SP Tulsian, an independent broker and RIL expert, says the losses are marginal compared to the investments. “The company has already increased its investments in these assets, though it will take some time before they turn profitable,” he added.

He said the company will take at least three years before the majority of the blocks become commercially viable or profitable.

Last year the company bought US shale gas assets of Pioneer Natural Resources, Atlas Energy and Carrizo Oil & Gas at a cost of $3 billion. The company also separately entered into a joint venture with Pioneer to address mid-stream opportunities in gas evacuation and transportation.

The shale gas blocks have a total resource potential of around 27 trillion cubic feet (TCF), of which 11.5 TCF would be net to RIL.

vikassrivastav

@mydigitalfc.com