Archive for April, 2010

Reliance announces fourth oil discovery

April 28, 2010

Mukesh Ambani-led Reliance Industries made a fourth oil discovery in the Cambay Basin in Gujarat.

Two hydrocarbon-bearing zones were discovered in a well drilled in exploration block CB-ONN-2003/1, which flowed 300 barrels of oil during testing, the company said in a press statement. The block was awarded under NELP-V round of exploration bidding, the statement added.

“The discovery is significant as this play fairway is expected to open more oil pool areas, leading to better hydrocarbon potential within the block,” it said.

The well, CB10A-F1, was drilled to a total depth of 1,605 metres and flowed at a rate of 300 barrels of oil per day (bopd). The 635-sq km CB-ONN-2003/1 block is located at a distance of about 130 km from Ahmedabad, in Gujarat. The block that covers an area of 635 sq km, is divided into two parts viz., Part A & Part B. RIL, as Operator, holds 100% participating interest (PI) in the block.

“This discovery, named Dhirubhai-47, the fourth oil discovery in the block so far, has been notified to the government and Director-General, Directorate General of Hydrocarbons,” the statement said.

“The potential commercial interest of the discovery is being ascertained through more data gathering and analysis,” Reliance Industries said in a statement.

RIL is continuing further exploratory drilling efforts in the block.


NTPC may sign for additional KG-D6 gas

April 23, 2010

State-run power producer NTPC is likely to sign contracts next week to buy an additional 1.51 million cubic meters a day of gas from Reliance Industries at government-approved price of $4.2 per mmBtu.

The additional gas would be used at NTPC’s Anta and Auriya plants in Rajasthan, Dadri unit in Uttar Pradesh and Faridabad plant in Haryana, official sources said.

Since these plants have already signed Gas Sales and Purchase Agreements (GSPA) for volumes totaling 1.81 mmcmd, only side-letters need to be signed for additional gas.

Sources said side-letters may be signed next week.

This follows Power Ministry’s ultimatum to NTPC to sign contracts immediately. While the government had allocated 4.46 mmcmd of gas from RIL’s eastern offshore KG-D6 field, NTPC has so far signed only for 1.81 mmcmd.

At a recent review of gas withdrawal from RIL’s eastern offshore KG-D6 fields, it was informed that the government had allocated 31.1 mmcmd gas to power sector on firm basis and an additional 12 mmscd on fall back or temporary bais. Against this, only 30.11 mmcmd was been drawn by the power utilities.

It was stated at the meeting that if the power utilities continue to draw less quantity of gas than what has been allocated, there is a possibility that the unutilised gas is allocated to other sectors, they said.

Of the 4.46 mmcmd allocated to NTPC, 2.65 mmcmd was for its Kawas and Gandhar power plants in Gujarat. But the state- owned firm did not want to use KG-D6 gas at these plants since it was in litigation with the Mukesh Ambani firm over fuel supplies to expansion projects planned at these sites.

So, an Empowered Group of Ministers (EGoM) last year decided that the state gas utility GAIL India will swap KG-D6 gas with fuel from other fields. Under this scheme, gas from western offshore Panna/Mukta and Tapti (PMT) fields that was currently supplied to NTPC’s northern India plants, was to be diverted to Kawas and Gandhar. The deficit at the northern India plants was then to be made up by KG-D6 gas.

But since PMT gas supplies to NTPC’s northern plants was only 1.51 mmcmd, a swap of only that volume has been affected.

Sources said GAIL has decided that 1.51 mmcmd of PMT gas that is currently being supplied to NTPC’s northern power plants would be diverted to Kawas and Gandhar. The northern plants will then be supplied KG-D6 gas.

NTPC currently buys 0.79 mmcmd of KG-D6 gas at its Anta, 0.54 mmcmd at Dadri, 0.26 mmcmd at Auriya and 0.22 mmcmd at its Faridabad unit.

With the swap, supplies would go up to 3.31 mmcmd.

RIL currently produces 63-64 mmcmd of gas against a potential of 80 mmcmd as government nominated customers like NTPC are yet to offtake their full allocated quantity.


RIL unit to raise 1000 cr in debt

April 23, 2010

Reliance Utilities and Power, which runs captive power plants for Mukesh Ambanii-led Reliance Industries, today said it plans to raise Rs 1,000 crore by way of debt.

The board of directors of Reliance Utilities and Power Pvt Ltd will meet tomorrow to “consider the issue of unsecured, redeemable non-convertible debentures” for raising up to Rs 1,000 crore, the company said in a regulatory filing.

Reliance Utilities and Power (RUPL) did not specify the need for the fund raising exercise. The company had earlier sought to raise Rs 500 crore in June, 2009, for “general corporate purposes” through issue of debt securities.

RUPL is primarily engaged in the business of setting up, operating and maintaining captive power plants at various manufacturing locations of Reliance Industries (RIL).

RUPL supplies power and steam to RIL’s facilities, such as those located at Hazira and Jamnagar. As of June, 2009, RUPL was operating and maintaining over 1,500 MW of power generation capacity.

The company has entered into a Power Purchase Agreement with RIL that is valid up to the 2015-16 fiscal. It had total secured loans worth about Rs 668 crore from banks as on March 31, 2009.

RUPL earned a net profit of Rs 243 crore in 2008, up from Rs 167 crore in the previous year.

Source:Business Standard

Reliance’s transport tariff on KG approved

April 20, 2010

Oil regulator PNGRB today approved the tariff that Mukesh Ambani-owned East-West pipeline will charge for transporting gas from Reliance Industries’ eastern offshore KG-D6 fields to users.

Against a levelised (or average) tariff of Rs 53.64 per million British thermal unit sought by Reliance Gas Transporation and Infrastructure Ltd, majority owned by RIL Chairman Mukesh Ambani, the Petroleum and Natural Gas Regulatory Board (PNGRB) today approved a provisional tariff of Rs 52.23 per mmBtu.

The Board, however, asked RGTIL to divide the Kakinada (in Andhra Pradesh) to Bharuch (in Gujarat) pipeline into three tariff zones as against two proposed by the company and apportion the levelized tariff.

RGTIL charged Rs 15 per MMBtu tariff for transporting gas in zone-1, i.e. Andhra Pradesh. For states between Andhra and Gujarat, it charged Rs 61.77 per mmBtu. The levelized or average of the two came to Rs 53.64 per mmBtu.

PNGRB’s order asking RGTIL to have three zonal tariffs would mean that it will charge different transportation fee for ferrying gas to users in Andhra Pradesh, Maharasthra and Gujarat.

In effect, users in Maharasthra like the Dabhol Power Plant will have to pay less than those in Gujarat. Currently, users in both states pay the same tariff.

“The provisional initial unit natural gas pipeline tariff on levelized basis determined by the Board shall be Rs 52.23 per mmBtu with effect from the date of commissioning of the natural gas pipeline ie April 1, 2009,” the PNGRB order said.

The difference between the tariff charged till now and that approved by the Board would be adjusted retrospectively with customers.

“The apportionment of the levelized tariff over all the tariff zone with detailed calculations will be submitted by the entity (RGTIL) for Board’s approval within 10 days of the issue of this order,” it said.

PNGRB said it will give the final tariff “once the audited cost and financial data” of the pipeline was available.


RIL Jamnagar Refinery Highest Exporter

April 13, 2010

After hitting the slowdown bump when it commissioned its second refinery in December 2008, Reliance Industries Limited (RIL)’s special economic zone (SEZ) in Jamnagar has finished its first full operational year in March 2010 with a quantum leap forward.

Emerging as the single largest export zone in the country, the Jamnagar SEZ has seen its export nearly touch Rs 80,000 crore till March 2010.

“The physical exports from RIL’s Jamnagar SEZ stood at Rs 71,000 crore while Rs 8,000 crore has come from deemed exports. It is the largest SEZ in the country in terms of exports,” said Upendra Vasishth, Development Commissioner (Jamnagar SEZ).

With a capacity of 29 million tonne per annum, the Jamnagar Export Refinery Project (JERP), located in an SEZ, added nearly 20 per cent to the country’s refinery capacity.

Exports from the SEZ were primarily aimed at US and European markets, besides several other locations, including Asia and Africa.

In 2008-09, exports from all SEZs in India were at a modest Rs 99,689 crore. This year the country’s SEZ exports are expected to cross Rs 2 lakh crore, according to Central government sources. The overall figures are still being finalised, the official said.

Gujarat based SEZs have meanwhile contributed about 50 per cent of the country’s overall exports, sources said.

The exports from the 10 operational SEZs in the state have clocked Rs 1,12,600 crore, said government sources.

Topping the charts after Reliance, is Surat SEZ or SURSEZ with Rs 24,000 crore worth of exports in 2009-10. Nokia SEZ in Tamil Nadu ranks third with its exports expected to be in the range of Rs 15,000-18,000 crore, said sources privy to the development.

Last year, SURSEZ was the largest exporter in the country followed by Nokia SEZ.

Exports from Kandla Port Trust’s SEZ and Adani’s Mundra SEZ have been Rs 2200 crore and Rs 1300 crore respectively in the last fiscal.

According to ministry of commerce and industry’s official site, Andhra Pradesh leads with 72 notified SEZs, followed by Maharashtra which has 57 SEZs. Tamil Nadu has 55 SEZs and Haryana has 32 notified SEZs.

Andhra Pradesh leads with 21 operational SEZs against Tamil Nadu’s 19. Maharashtra and Karnataka rank third, with 15 SEZs operational SEZs each.

In all, there are 105 operational SEZs in the country with an overall export of Rs 1.5 lakh crore till December 31, 2009, according to official figures by the Ministry of Commerce and Industry.

Formal approvals have been accorded to 571 proposals, of which 348 SEZs have been notified. In Gujarat, so far 48 SEZs have formally been approved out of which 30 have been notified. Maharashtra has been approved 109 SEZs — the highest in the country — of which 57 have been notified.


Reliance Retail brings Hamleys to Mumbai – Plans for 20 more stores

April 13, 2010

Hamleys, a 250 year-old toy retailer of the UK, on Thursday opened its first store in Mumbai in a franchise agreement with Reliance Retail, a wholly owned subsidiary of the Reliance Industries. The tie-up is valid for 20 years. The company plans to invest Rs 150 crore in the next seven years to set up 20 more stores across the country, including tier-II cities.

The size of the Mumbai store is around 21,000 square feet, while the one being opened in Chennai within six months will be close to 10,000 sqft, according to Bijou Kurien, president and chief executive officer, Reliance Lifestyle division. The Indian division of Hamleys, though, is going to be headed by Sudhir Pai.

Hamleys is based in London and is one of the world’s largest toy companies. Its flagship store located at the Regent Street is a five-storey building spread over 54,000 sqft. It is considered one of London’s major tourist attractions.

The first store has seen an investment of Rs 6 crore. Kurien explains that the investment has been significant as far as setting up this store is concerned. “The hard investment for the stores in terms of occupying retail space is going to be made by Reliance Retail. As for the soft investment in terms of store design and staff training, it will be done by Hamleys.”

Reliance Retail in 2008 had said it was in talks with the UK toy retailer. The reason for the delay, as Kurien reckons, is “finding the right location for the store”.

Moreover, the company is also looking at spending around Rs 50 lakh on advertisement for the first store.

The total organised toy market is India is around Rs 1500 crore. It caters to about 30 crore kids upto 15 years of age. Reliance Retail will be looking to have a “sizeable” share in it.

The firm will open 20 stores in India over the next six to seven years in partnership with Reliance Retail, which has a 20-year-franchise agreement with Hamleys.

Hamleys will invest around Rs1.25bn (£18.3m) in the scheme and will open its next store in Chennai in the next few months, having already opened a 21,000 square feet store in Mumbai.

“The organised retail toy market in the country is close to Rs15bn (£220.5m) and Reliance Retail will be looking to have a sizeable share in it,” Bijou Kurien, president and chief executive – lifestyle, Reliance Retail, commented.

Reliance Retail will stock Hamleys merchandise, but also products that are exclusively available to the UK retailer.

Apart from stocking Hamleys merchandise, Reliance Retail will stock products that are exclusively available to the UK retailer. Other global brands from companies such as Mattel and Funskool will also be available at these outlets.

Reliance Industries Technology Group to do feasibility study on algae derived biofuels

April 8, 2010

Feasibility study of algae as an alternate feed stock for biofuels should be undertaken as a part of meeting challenges for biofuels in India, a top Reliance Technology group official has said. He adds that algae oil can be used to make bio-diesel or other refinery feed stocks.

“Algae seems to be the most promising feed stock. Microalgae are uncellular biofactories that can provide oil from sunlight and carbon dioxide,” M. Ganapati, President, Corporate Planning, Reliance Technology Group told PTI after delivering a talk on ‘Biofuels Scenario in India’.

Algae oil can be used to make bio-diesel or other refinery feed stocks, he said. “Critical Research and Development objective should be to promote premium quality fuel from Algae at a cost competitive with petrol and diesel,” Mr. Ganapati said.

Mr. Ganapati also hinted at RIL considering a proposal on setting up of a biofuel refinery. He also said that the government should offer tax incentives and selective investment grants to biofuels which will facilitate the update of biofuels. He stressed the need on required dedicated R&D for the development of second generation biofuels. “There should be demonstration of technology for second generation biofuels. Another factor for meeting challenges in biofuels is availability of feed stocks, collection storage, logistic Jatropha plantation, high yield variety development and harvesting, technology among others,” Mr. Ganapati added.


Reliance enters the biosimilar market

April 5, 2010

The Mukesh Ambani-owned Reliance Life Sciences plans to launch its biosimilar drug to stimulate red blood cell production in Europe within a year since it has completed all required testing and now awaits final regulatory approval.
Unlike the pharmaceutical market that is flooded with generic versions of drugs, the biosimilar market, or market for generic versions of biological medicines, is relatively untapped. The global market for biosimilars is estimated at over $19 billion, and like all new things, the industry expects to make significant profits in the initial years.

Reliance Life Sciences will take the path of least resistance, KV Subramaniam, president and CEO, Reliance Life Science told ET. “The US doesn’t worry us. There is a pathway in Europe, and Erythorpoietin (the red blood cell stimulant) will give us the confidence to take others to market.” The company is privately-owned by Mr Ambani and doesn’t disclose numbers.

In the recently-passed US Health Bill the data exclusivity period for biological drugs was extended to 12 years from seven earlier, which is seen as detrimental to development of biosimilars. Countries are sceptical to allow biosimilars because they contain living active ingredients and are relatively new, so regulators have less experience in testing and dealing with them.

While Europe has a policy that approves of biosimilars, Indian companies have found it hard to crack the code. Dr Reddy’s has been in talks with regulators to launch a biosimilar since 2006 and is still waiting. Biocon acquired a company in Germany in 2008 to reach the market. Some global players like Novartis, Hospira and Teva have a head-start because they are marketing some products in developed markets.

Mr Subramaniam said the company’s thrust in this year will be to expand its Indian business and enter new, semi-regulated markets.

Unlisted Reliance Life Sciences that swung to profits in the just-ended year, already has four biosimilar products in India, and plans to launch another three in this year, said Mr Subramaniam.

The company is also developing biosimilars for five monoclonal anti-bodies that are in pre-clinical stages. Monoclonal antibodies are used to treat a variety of diseases, including cancer, cardiovascular, and inflammatory problems. The company focuses in gastro intestinal, oncology, gynaecology, neurology and nephrology treatments.

“The objective is to find unmet need and discover new therapies,” said Mr Subramaniam.

Reliance Life Sciences makes four generic pharmaceutical drugs that are used to treat cancer. The company plans to grow this, said Mr Subramaniam. “To take it to culmination, we would need to look for acquisition. Perhaps a year later.”

“Valuations are a big issue,” he said, adding “What promoters expect is too high.” Valuations of pharmaceutical companies have shot up in the last year. “We are a conservative company. We won’t offer so much premium.”

Reliance Life Sciences would like to acquire companies that will give it access to developed markets like the US, Europe, said Mr Subramaniam. The company isn’t particularly looking at significant operations in India, he added.

Reliance Life Sciences is most known for the stem cell therapies that were once considered the solution to all illness. “People are selling false hope,” said Mr Subramaniam. There are hardly any studies of stem cell research to prove consistent performance of solutions, he said. Much of it is owing to under-regulation in the area, he added.

The company has a stem cell treatment to repair the Limbus in the eye that’s between the cornea and the white part of the eye. It is currently testing one to repair conjunctiva cells that form a thin film covering the eye.

“It is 60% efficient at the moment. We expect to bring product to market within one year,” said Mr Subramaniam. Yet another one for retinal cells is under development, but it is more complex and will take several years before it is ready, he added.

The company also hopes to enter regenerative therapies for acute kidney injuries and wound management, he said. However, the biggest concern with stem cells is that so far it is not scalable.

Therefore mass, ready to use solutions are not available. At present, the original cell has to be taken from the patient, grown and then used. This is a lengthy and expensive process.

A large central repository of stem cells will be required to find matches for every patient and make stem cell treatments mass, said Mr Subramaniam. “That is still many years away.”


Reliance’s KG Gas provides relief to power and fertilizer firms

April 5, 2010

Natural gas from Reliance Industries’ prolific D6 field has generated savings worth thousands of crores of rupees for power and fertiliser companies, the main users of the gas.

Commercial production from the field in the Krishna Godavari (K-G) basin started on April 2 last year.

The gas-based power industry is estimated to have saved Rs 6,000 crore over the last year, while the government’s fertiliser subsidy bill is estimated to be lower by Rs 3,100 crore.

Users within the country could get gas from the D6 field, located off the Andhra cost, at a landed cost of $ 4.2 per million British thermal units (mBtu). This price was much lower than alternates like imported liquefied natural gas (LNG), the price of which touched over $20 per mbtu. It was, however, higher than the subsidised price at which the government sold gas to select customers.

NTPC, the country’s largest power producer, could reduce its pricey LNG imports as domestic gas became available. The power sector, the biggest consumer of K-G gas, was sold about 18 mscmd of gas, used across 4,745 Mw of power capacity.

According to industry experts, the cost of generating power from naphtha, assuming a naphtha price of $10 per mBtu, would be Rs 3.97 per unit, while the cost of generation from KG-D6 gas assuming a delivered price of $6 per mBtu would be Rs 2.50 a unit. “Depending on the current price of naptha (which is an alternative feedstock), the power sector is estimated to have saved about Rs 6,000 crore while using gas as feedstock,” said Rakesh Jain general manager (energy division) at Feedback Ventures.

These savings have gone to the pocket of the consumer, according to Jain, since most producers have agreements with the state power utilities to simply pass on the cost of fuel to the consumers.

The average saving to a household in Andhra Pradesh, a state which houses some of the plants to which the D6 gas has been allocated, would be as much as Rs 300 per month, according to industry experts.

This is assuming an annual power consumption of 2,448 kilowatt hour.
The fertiliser sector also benefitted, as it switched to gas.

“It has been a very good experience. The supplies have been stable, leading to smooth operations, and we did not use any naphtha (as fuel) in the past one year. The subsidy saving to government from our plant alone is around Rs 100 crore,” said Kapil Mehan, executive director, Tata Chemicals.

The company is using 0.88 million standard cubic metres a day (mscmd) of K-G gas at its fertiliser plant in Babrala (Uttar Pradesh). The total gas supply to fertiliser sector during 2009-10 was 12.24 mscmd, which translated to a production of 6.10 million tonne of urea.

The D6 field is currently producing 60 mscmd of gas.

The government, through its gas utilisation policy, has made allocations to various priority sectors like power, fertiliser, steel, city gas, refineries, petrochemicals, LPG and captive power.

The power sector has been allocated 31.165 mscmd of gas on a firm basis and another 12 mscmd of gas on fallback basis. The fertiliser sector has been given firm allocation of 15.508 mscmd, refineries have been given 5 mscmd of firm allocation and 6 mscmd of fallback allocation and the steel sector has been given 4.19 mscmd firm allocations.

A fallback allocation implies that the sector will get gas if the firm allocation of other sectors is not fully consumed due to some reason.


Govt to review Reliance’s gas allocation from KG basin

April 1, 2010

The Government intends to review the allocation of Reliance’s gas produced from the Krishna Godavari (KG) Basin D6 field. It could re-fix allocation as per the amounts drawn so far by the customers.

Ministry officials told Business Line that the Petroleum Secretary, Mr S. Sundareshan, had conducted a review meeting recently on off-take of KG gas by the allottees.

He is understood to have asked them to come back in a fortnight’s time with details on their off-take, and how much they can actually absorb.

A final view will be taken in mid-April, based on which a decision will be taken on the unused quantity. If necessary, a decision on re-allocation could be also considered, officials said.

Asked if there were any penal provisions in the Gas Sales and Purchase Agreement (GSPA) that Reliance has entered into with these customers for non-drawal of gas, sources said “no penal provisions have been provided for non-drawal of gas by the consumers during initial six months of the supply.”

RIL is currently producing 60-62 mscmd of gas, which has been allocated to identified customers from the priority sectors — power, fertiliser, steel, city gas distribution, gas-based LPG plants, petrochemicals sector, and refineries — based on a decision of an empowered group of ministers.

Reliance, which had planned to ramp up its production to 80 mscmd by March, claims that for want of customers and choked pipeline network, it has not been not able to do so.