Reliance Industries Limited (RIL), India’s largest private sector firm, has withdrawn from an offshore oil exploration block in the Sea of Oman, authorities confirmed here yesterday.
Block 18, a 21,140 sq km concession located off the Batinah coast, was relinquished by the conglomerate’s wholly owned Dubai based subsidiary Reliance Exploration and Production DMCC. Its decision follows an exploratory drilling campaign that failed to unearth any significant prospects, a source said.
The move comes six years after Reliance inked a deepwater Exploration and Production Sharing Agreement with the government for Block 18 in the Sohar Basin in June 2005. The pact had given rise to hopes of a maiden foray into deepwater exploration targeting the Sultanate’s vast offshore acreage for the first time.
In withdrawing from the concession, Reliance stated that the results of a drilling campaign targeting Block 18 had “not been encouraging”. It estimated the total expenditure incurred on Block 18, as well as another block in East Timor, as amounting to $177 million.
The state-owned Oman Oil Company Exploration and Production (OOCEP), which had acquired a 30 per cent interest in Block 18 under a farmout agreement signed in October 2009, is unlikely to take over the concession, it is learnt. Rather, the Ministry of Oil and Gas is expected to remarket the block.
In conjunction with the farmout agreement, OOCEP also signed a Joint Operating Agreement with Reliance, which provided the basis for the setting up of a joint operating company to be managed by the two companies upon a commercial discovery being established in Block 18.
(Under a separate farmout agreement concluded with Reliance, OOCEP also acquired a 25 per cent participating interest in the adjoining offshore Block 41 which was awarded to the Indian conglomerate in November 2007.) OOCEP is the upstream spinoff of the wholly government owned energy and strategic investment vehicle Oman Oil Company SAOC.
Meanwhile, Reliance is currently focused on the development of its sole existing concession in Oman — the offshore Block 41concession, which covers an area of around 23,800 sq km extending offshore the Sharqiya coast. The company is awaiting the results of 2D seismic surveys before it pursues the next phase of its exploratory plan.
Reliance Exploration and Production DMCC’s portfolio currently consists of 12 blocks spread across Oman, Yemen, Kurdistan, East Timor, Peru, Australia and Colombia.
Reported by: Conrad Prabhu ( Oman Observer )
[mappress] Source: Oman Observer, August 23, 2011; Image: Reliance Industries