RIL's stake in Iraq oil block reduces to 80%

Reliance Industries' holding in northern Iraq oil block has been reduced to 80 per cent after the Kurdistan Regional Government assigned 20 per cent stake in the block to Austria's OMV Petroleum Exploration Gmbh.

"The Regional Government of Kurdistan has assigned third party participating interest of 20 per cent each in blocks Rovi and Sarta to OVM," a source in know of the development said.

Rovi and Sarta onland blocks in northern Iraq may hold one billion barrels of oil reserves. In 2007 Reliance had paid a signing amount of $15.5-17.5 million (rpt) million to autonomous Kurdish Regional Government for the two.

Reliance has so far not signed the agreement to assign 20 per cent stake in the two blocks to OVM and it is not clear if the stake was transfered with its consent. A company spokesperson did not reply to the query sent for comments.

Industry sources said KGR may have sold the stake to OVM for a premium. The blocks have almost 80 per cent oil bearing structure and Reliance was confident of making a discovery soon.

The Rovi and Sarta blocks are encompassing an area of 517 and 607 sq km, respectively, and are estimated to hold around one billion barrels of oil reserves. Reliance had planned to drill four wells in these blocks to a target depth of 4,500 metres.

When Reliance Exploration and Production DMCC, a unit of Reliance Industries, was awarded the Rovi and Sarta blocks in 2007, Austria's OMV signed up for Mala Oman and Shorish blocks with the KRG.

It now has a stake in Rovi and Sarta as well. Sources said Reliance's contract with KRG provides 15 per cent interest to local Kurdish oil firm and if that right is exercised, the Indian firm's stake would be reduced to 65 per cent.

Reliance has 13 blocks in its international exploration and production portfolio including two in Peru, three in Yemen (1 producing and 2 exploratory), two each in Oman, Kurdistan and Colombia, one each in East Timor and Australia.

When it signed the agreement for Rovi and Sarta with KRG, Reliance faced being blacklisted by the Iraqi government, which said the award of blocks were not approved by it.

At the time of the backlash from Iraq, Reliance had stated that: "The two exploration blocks in the Northern Iraq in Kurdistan Region for which we have signed the agreements are within the legal framework.

While the Kurdistan blocks stayed with it, Reliance did not participate in Iraq's two rounds of auction of world's most promising oilfields in the war-ravaged nation. Reliance had set up a local office in Erbil in the Kurdistan region in 2006 for exploration research.