RIL in Talks with ExxonMobil, Chevron for Stake in KG-6

ExxonMobil and Chevron have started negotiations with Reliance Industries Ltd for an equity stake in the latter's gas discovery at the Krishna Godavari Basin, held jointly with Canada-based Niko Resources.

According to sources, the KG-6 gas basin, which pumps out 120 million cubic meter of gas daily from 13 operating wells, is valued at around Rs 14,000 crore. Reliance had bid for 12 such blocks in the first round of National Exploration Licensing Policy and additional two in the second round of bidding.

Sources added that the Ambanis-controlled Reliance group is willing to offer up to 40% stake to a prospective buyer, after retaining majority control of 50% and leaving the remaining 10% with the Niko Resources of Canada. They said the deal would fetch close to Rs 6,000 crore.

ExxonMobil is being advised by Merrill Lynch for negotiations with the country's largest private sector conglomerate and Chevron has appointed Goldman Sachs as its investment banker. A Reliance spokesperson, when contacted, declined to comment.

According to industry observers, Reliance's strategy is to fill its warchest for investing Rs 15,000 crore in refining to increase its capacity, and Rs 15,000 crore in petrochemicals by 2008.

Copyright (c) 2005, The Economic Times, India Distributed by Knight Ridder/Tribune Business News.