Ambani's Rise to Becoming the Richest Oilman Ever
Mukesh Ambani is the chairman and managing director of Reliance Industries, the largest private company in India and a Fortune 500 company. Ambani is reported to have a personal wealth of $27 billion, down from $29 billion in 2010. Nevertheless, he is the richest man in Asia, and the ninth richest man in the world. However, it wasn't long ago that he was the richest man in the world with a net worth around $63.2 billion. According to Forbes Magazine, he is on track to regain this title in 2014.
Under Ambani's leadership, Reliance Industries reported revenues of about $44.6 billion, net profits of $3.6 billion, and total assets of $55.9 billion in 2010, which is unparalleled in the Indian private sector. In addition, exports were around $24.5 billion, which is about 14% of India's total exports.
Most recently, Ambani has struck a "mega deal" with BP to sell a stake in 23 oil blocks in India. The Krishna-Godavari basin, India's largest gas find thus far, is part of the deal. BP is prepared to pay $7.2 billion for the 30% stake. Also part of the deal, Reliance and BP will establish an equal joint venture for the sourcing and marketing of gas in India.
And just last year, Ambani scored three shale gas ventures in the US, including a $1.7 billion deal with Atlas Energy in April to own 40% of its Marcellus Shale interests. Reliance paid $340 million in cash upon closing and an additional $1.36 billion in the form of a drilling carry for this deal.
Ambani is the eldest son of Dhirubhai Ambani. Born on April 19, 1957, he has a brother, Anil, and two sisters. His brother is also a billionaire who owns Reliance Anil Dhirubhai Ambani Group, a banking and telecom company.
Growing up, Mukesh lived in a two bedroom apartment with his family in Bhuleshwar, Mumbai. In the 1970s, Dhirubhai Ambani moved his family to a 14-floor apartment. Until recently, Mukesh and Anil both lived there on separate floors with their families.
Mukesh recently completed a billion dollar home named Antilia. The high-rise building has 27 stories, including six for parking, one floor for car maintenance, an entertainment floor, balconies with gardens, athletic and health floors, a guest floor, four floors for the family, and a helipad, of course. The residence will require 600 full-time daily staff.
Dhirubhai founded Reliance Group in 1966 as a polyester firm, and instilled in both sons a passion for business and entrepreneurship. Thus, when Mukesh Ambani was in high school, he was known to spend hours in the office on weekends to learn his father's business.
When it came time for Ambani to choose a college, he opted to study chemical engineering at the University of Bombay's Department of Chemical Technology. He went on to business school at Stanford University where he earned his MBA. After Standford, Ambani had plans to join World Bank's Young Professional Program, but he chose instead to help his father with Reliance's polyester plant.
When Ambani formally joined Reliance in 1981, he took control of Reliance's backward integration from textiles into polyester fibers and further into petrochamicals, petroleum refining, and oil and gas exploration and production. During the process of backward integrations, Ambani created 51 world class manufacturing facilities involving diverse technologies that raised Reliance's petrochemicals manufacturing capacities from less than a million tonnes to about 20 million tonnes per year.
Ambani worked tirelessly to create the world's largest grassroots petroleum refinery at Jamnagar, Gujarat in India. The refinery was commissioned in July 1999 with an installed capacity of 661,000 b/d.
In December 2008, Reliance announced the commissioning of its refinery in a Special Economic Zone at Jamnagar, which has the largest refining complex in the world with a combined capacity of 1.24 MMb/d integrated with petrochemicals, power generation, port and related infrastructure. It is considered the "refining hub of the world."
Ambani also made Dhirubhai's dream project, Reliance Infocomm, a reality. Reliance Infocomm was one of the largest and most complex information and communications technology initiatives in the world. Today it is known as Reliance Communications Ltd.
When Dhirubhai died in July 2002, he left the $15 billion conglomerate to his two sons who split Reliance Industries in 2005 after a bitter seven-month feud. Mukesh kept Reliance Industries, Indian Petrochemicals Corp. Ltd., Reliance Petroleum and Reliance Industrial Infrastructure Ltd. and kept the Reliance name. Anil Ambani formed the Reliance Anil Dhirubhai Ambani Group, which includes Reliance Communications, Reliance Capital, Reliance Energy, and Reliance Natural Resources Ltd.
However, the feud was not over. The brothers continued to argue over a contract in which Reliance Industries agreed to sell natural gas to Reliance Natural Resource at $2.34 per mbtu for 17 years. However, in 2006 the government set a higher selling price at $4.20 per mbtu, which was 44% less than the governments price, and Mukesh expected his brother to follow suit. When Anil refused to follow the government's price, he cited his agreement with his brother. A 2010 court ruling finally settled the dispute in favor of Mukesh, saying that the government owns the country's resources and sets the price, which overrides any private agreement.
Reliance Becomes a Powerhouse
Mukesh took over the reins at Reliance Industries and quickly made it an oil, gas, and petroleum exploration powerhouse with the biggest natural gas discovery in India and the world's largest gas discovery of 2002.
Reliance's India Operations
The D6 block is in the Krishna-Godavari basin of the Bay of Bengal on India's east coast in water depths ranging from 2,297 ft to 5,577 ft. Reliance operates the field with 90% interest with partner Niko Resources.
The first three discoveries, Dhirubhai-1, Dhirubhai-2 and Dhirubhai-3, were estimated to have reserves of 8 Tcf. Dhirubhai-4, discovered in March 2003 using Transocean's Discoverer 534 rig, has in-place gas volumes of 1,7000 bcf.
Transocean's Discoverer 534
Almost three years later, Reliance encountered the thickest hydrocarbon column to date. The MA-2 well reached a depth of 3.6 km and penetrated a gross hydrocarbon column of 194 m, which had 170 m of gas condensate of 53 degree API and 24 m of oil of 42 degree API.
Production of crude from the MA field started in September 2008, followed by gas production from the D1 and D3 fields in April 2009.
In June 2008, Reliance began conceptual studies to develop an additional nine natural gas discoveries near the D1 and D3 fields. Reliance will most likely tie the satellite discoveries to the D1 and D3 production facilities.
Currently, Reliance is reporting a current gas output capacity of 52-53 MMscm/d at its D6 block, which is down from the 60 MMscm/d reported in October 2010. Four more wells came online in April, which will raise the output capacity to 60 - 80 MMscm/d. The field is expected to reach peak production in March 2013.
Today, Reliance has three projects in progress. Transocean's Deepwater Frontier drillship has been working off India since August 2008 at a dayrate in the high $400s. The contract expires in July 2011. Transocean's Dhirubhai Deepwater KG2 drillship is also off India. The rig just spudded a third exploration well on the D9 license. The current contract started in October 2010 and runs through February 2015 at a dayrate in the low $500s. For Reliance's third project, the operator has also employed a Transocean drillship, the Discoverer India. The rig, which started its contract in December 2010, has a dayrate in the low $500s for the first six months. It is on its way to the Gulf of Mexico on a sublet to Chevron this summer. The dayrate then jumps to the mid-$500s through December 2015.
Dhirubhai Deepwater KG2
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