Sucheta Dalal :RIL wants ADAG's 'malicious' ad campaign nipped in bud
Sucheta Dalal

Click here for FREE MEMBERSHIP to Moneylife Foundation which entitles you to:
• Access to information on investment issues

• Invitations to attend free workshops on financial literacy
• Grievance redressal


You are here: Home » What's New » RIL wants ADAG's 'malicious' ad campaign nipped in bud
                       Previous           Next

RIL wants ADAG's 'malicious' ad campaign nipped in bud  

August 24, 2009


Terming as 'malicious, baseless, mischievous and ill-informed' the advertisement propaganda by Anil Dhirubhai Ambani Group (ADAG) on its gas field capacity expansion (capex), Reliance Industries Ltd (RIL) has stated that the development cost was the lowest in the world and compares favourably to any other project in India.
RIL president and chief executive for petroleum, PMS Prasad on 20th August wrote to Oil Secretary RS Pandey, saying "certain parties are bent upon holding the country's price and national interest hostage to their own narrow commercial interests and are stopping at nothing to destroy the reputation of the country."
"It is necessary to nip these malafide endeavours in the bud for the sake of the energy security of the country," wrote Prasad, who a day later was appointed to the board of RIL.
He said the capital expenditure for developing Dhirubhai- 1 and 3 fields in KG-D6 block had gone up to $8.83 billion from $2.47 billion in 2003 because of increase in reserves by over 2.5 times, trebling of production facilities, doubling of peak production, increase in number of wells, field life and inflation in equipment and services industry.
"Despite the increase in costs, Goldman Sachs' study of the major E&P projects across the world verifies that the finding and development costs of about $5 per barrel of oil equivalent are amongst the lowest in the world," he said, listing F&D cost of a host of projects by global majors.
The KG-D6 cost also compared favourably to Cairn India's Rajasthan oilfields - the other major project being developed in the country currently, Prasad wrote.
The cost of developing MARS and Bhagyam onland oil discoveries is estimated to be $3.6 billion for an estimated recoverable reserve of 390 million barrels of oil, which is about $9 per barrel of oil equivalent compared to about $5 per barrel for RIL's deep sea gas field.
"We deeply resent all attempts being made to belittle the achievements of scores of dedicated professionals and regulators who by their tireless efforts have made this stupendous achievement possible in such a short time," he wrote.
"It saddens us that self seeking vested interests... are also casting aspersions on one of the world's most transparent and fair policy regimes which has been recognised as such, all over the world."
RIL said the advertisement campaign was an attempt to destroy value created in the project and "maliciously harm the country's reputation as an investment destination" and delay and disturb the systematic development of the field.
The increase in capex, it said, was concomitant on a massive expansion in the scope of work and debilitating market conditions that set in as crude prices broke all records.
Last week, the Indian government had asked the warring Ambani brothers to show some "restraint" ahead of a Supreme Court hearing on 1st September. In a statement, the oil ministry called the recent ad campaign "most unfortunate" and advised "parties to the dispute" to "exercise restraint".
The dispute between the world’s richest brothers has hampered the fuller harnessing of the KG basin for meeting the energy needs of the country. India imports over 70% of its oil and the KG basin gas alone could reduce the annual import bill by over $20 billion.

-- Sucheta Dalal