RIL signs deal to sell CB10 block stake to Sun Petro
Oil-to-telecom conglomerate Reliance Industries (RIL) has entered into an agreement with Sun Petrochemicals to sell its stake in the Cambay Basin10 (CB10) block in Gujarat as part of its portfolio rationalisation strategy. The company, however, has not disclosed the deal size.
“RIL signed a sale and purchase agreement (SPA) with Sun Petro to farm out its 70 per cent interest in the block. The application for assignment has been submitted to the Government of India for approval,” the company said in its results statement on Friday.
UK-based oil major BP holds the remaining 30 per cent interest in the block.
According to RIL’s annual report for 2017-18, the field development plan (FDP) for discoveries in this block is approved and part of the block is relinquished as RIL did not enter the next exploration phase. The joint venture acreage for the block is 14,826 acres, it said.
The CB-ONN-2003/1(CB 10 A&B) block was awarded to RIL under the New Exploration Licensing Policy
(NELP)-V round of exploration bidding.
With this exit, RIL’s India conventional oil and gas exposure will stand at five assets, including Panna Mukta, Krishna Godavari
Basin and Tapti. Company sources termed the agreement as part of RIL’s portfolio rationalisation strategy. So far, RIL’s exit from Indian blocks has been through relinquishment; this will be the first time a block will change hands through a sale and purchase agreement.
As part of its rationalisation strategy, the company has exited its entire conventional oil and gas blocks portfolio outside India. Its latest annual report shows the company has withdrawn from the Peru block and awaits a formal assignment.
Oil and gas is RIL’s smallest revenue contributor. The segment continued to report losses in the June quarter, while revenue generation showed a positive trend. Revenues for this segment rose 8 per cent to ~14.32 billion, predominantly due to higher gas and oil price realisation. The segment Ebit loss was ~4.47 billion. RIL is also looking to merge Reliance Holdings USA with itself. Company officials said the merger would help the company look at pooling its international gas resources for India, similar to its ethane imports.
The management indicated the move would include transfer of some assets and liabilities to RIL’s books, but refused to share more details as the Reserve Bank of India (RBI) approval is awaited for the same.
Dillip Sanghavi promoted Sun Petrochemicals has been rapidly expanding in the oil and gas sector.
In December 2016, the company signed an asset purchase agreement with Niko Resources for its operating interest in the Hazira field. The company also won a block in the discovered small field bidding round in 2017. In 2015, Sun also signed a deal for the transfer of Interlink Petroleum's interest in Modhera and Baola oil and gas fields in Gujarat.