Reliance finds oil in western India
Shares gain as much as 3.7% as energy major expects find to open block's potential
Mumbai: Energy major Reliance Industries has made its first oil find in a western Indian block, boosting hopes the firm's oil and gas exploration business will help offset some of the weakness in the refining sector.
Reliance, India's biggest conglomerate, with interests in petrochemicals, refining, oil and gas exploration and retail, said it made the discovery in its onland exploratory block in the Cambay basin in Gujarat state.
Five wells had been drilled in the area, and the fifth well flowed at a rate of 500 barrels of oil per day (bopd), the company said on Tuesday.
"This discovery is expected to open future potential within the block," Reliance said in a statement.
The news boosted shares in Reliance, which has a market value of $71 billion, as much as 3.7 per cent. By 0956 GMT, Reliance was trading up 1.7 per cent at Rs2,058 in a weak Mumbai market that had slid 0.3 per cent.
The discovery also helps allay some of the worries over uncertainty surrounding a gas-pricing dispute.
Reliance, controlled by billionaire Mukesh Ambani, is embroiled in a high-profile legal battle over a deal to sell gas to Reliance Natural Resources, led by Ambani's estranged younger brother Anil, at below the price set by the government.
Dispute
Media reports of a recent meeting between the brothers to settle the dispute are baseless, and the matter will be decided by India's Supreme Court, which is hearing the case, Reliance Industries said in a statement.
"The result of this battle will be a key factor determining the oil industry's future," said R.K. Gupta, managing director of Taurus Mutual Fund. "The issue of the pricing of oil and gas needs to be cleared."
Reliance holds a 100 per cent participating interest in the Cambay basin block, which covers an area of 635 square kilometres.
"Overall, the company has had a very high strike rate," said Maulik Patel, an oil and gas analyst at K.R. Choksey Shares and Securities who has a ‘hold' rating on Reliance's stock.
"Much more than some competitors."
