Reliance may sell upto 10% in KG basin assets

According to sources, Reliance Industries (RIL) has initiated talks with global majors to offload upto 10% stake in its D-6 block in the Krishna Godavari (KG) basin. RIL owns 90% of its D6 Block located in the Krishna-Godavari, or KG, basin off the Bay of Bengal. RIL is likely to spin off its KG assets into a new company and then offer close to 10% stake to a strategic partner. This is to ensure that the partner does not get a stake in RIL. This deal, if it goes through, will help RIL’s plans, as a lot of capital expenditure required for the gas production and transmission can be done through this deal.

The gas output from RIL’s D-6 block in the KG basin may rise another 50% to 120 mmscmd after eight new discoveries. With the gas projection from KG basin being increased to 120 mmscmd and commercial production just a quarter away, the valuation of the field will go up by 50%. This strategic move will create additional share holder value, if done after resolving its gas sales dispute with Reliance Natural Resources (RNRL).