Reliance in running for Marcellus JV - source

MUMBAI Wed Mar 17, 2010 8:14am IST

Reliance Industries' KG-D6 floating production storage and offloading vessel is seen off the Bay of Bengal in this undated handout photo. REUTERS/Reliance Industries/Handout

Reliance Industries' KG-D6 floating production storage and offloading vessel is seen off the Bay of Bengal in this undated handout photo.

Credit: Reuters/Reliance Industries/Handout

Related Topics

MUMBAI (Reuters) - Energy major Reliance Industries is seeking a joint venture with Atlas Energy to develop the U.S. firm's Marcellus Shale gas operations, a source with direct knowledge of the matter said.

Independent oil and gas company Atlas is looking for a partner for its operations in the booming Marcellus Shale in the eastern United States, which could bring in $1 billion or more for the firm.

Reliance, India's largest listed firm, is eyeing a deal in the wake of two recent failures in trying to gain a foothold outside India, as it attempts to break into new markets and expand its various businesses including refining, oil and gas exploration and petrochemicals.

The Marcellus Shale, which spans parts of Pennsylvania, West Virginia and New York, could hold enough natural gas to satisfy U.S. demand for a decade, according to some geologists.

Analysts have said Reliance, controlled by the world's fourth-richest man Mukesh Ambani, should seek oil and gas assets overseas as these can feed the company's massive refining complex in western India.

The company has raised $2 billion by selling stock in recent months, a warchest it could put to use for its ambitious overseas plans.

Reliance, founded by Ambani's father Dhirubhai, a school teacher's son, has not met with much success yet in its foreign takeover attempts.

Bankrupt petrochemicals firm LyondellBasell recently rejected a bid from Reliance that valued the target at about $14.5 billion, and the Indian firm also lost a race for Canadian oil sands firm Value Creation, in which it wanted to take a majority stake for $2 billion.

In late 2008, Reliance commissioned a 580,000 barrels per day (bpd) refinery next to its existing 660,000 bpd plant at Jamnagar in Gujarat. Together, the plants make up the world's largest oil refining complex.

Atlas' core Marcellus position consists of 266,000 acres largely in southwestern Pennsylvania. Bidders for the Atlas position should include large international integrated oil and gas companies as well as domestic independent oil and gas companies, sources have told Reuters.

In a similar deal, Japan's Mitsui & Co Ltd paid $1.4 billion to become a joint venture partner with Anadarko Petroleum Co in the Marcellus. In that deal, Mitsui paid around $14,000 an acre for about 100,000 acres in north-central Pennsylvania.

In 2008, Chesapeake Energy Corp sold 32.5 percent of its holdings in the project to Norway's Statoil for $3.375 billion.

Atlas could not be immediately reached for a comment. Reliance declined to comment.

Shares in Reliance, with a market value of about $74 billion, rose 3.8 percent to 1,066.80 rupees in a Mumbai market that gained 1.3 percent on Tuesday.

Atlas Energy shares were up 1.5 percent at $34.63 in early morning trade Tuesday on Nasdaq.

(Additional reporting by Michael Erman in NEW YORK; Editing by Tony Munroe and Aradhana Aravindan)

(For more business news on Reuters Money visit www.reutersmoney.in)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Earnings Season

Earnings Season

Reliance Q4 sales rise, refining margin narrows.  Read 

Innovative Solution

Innovative Solution

Turning smog into jewels - a Dutch designer's solution to Beijing's pollution.  Video 

Insider Trading

Insider Trading

Rajaratnam's brother loses bid to dismiss insider trading charges.  Full Article 

Literary Giant Dies

Literary Giant Dies

Mourning and memories in Gabriel Garcia Marquez's languid hometown.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage