Mukesh Ambani outlines RIL's growth plan

India's most valuable company, Reliance Industries Ltd, on Tuesday outlined its growth plan and said it is scouting for oil and gas properties overseas, which will help bring about a better balance between domestic and international operations.

"Reliance continues to accrue oil and gas properties overseas. These overseas oil and gas initiatives would reinforce the domestic effort. It will also bring a better balance between domestic and international operations as well as between onshore and offshore properties," RIL's chairman and managing director, Mukesh Ambani, told shareholders at the company's 35th annual general meeting in Mumbai.

The petrochemical giant currently has 99,000 sq km of acreage under exploration in Oman, Yemen, Colombia, East Timor and Peru.

Ambani said RIL has also commenced drilling its first offshore exploratory well as an operator in the deep waters of Oman block 18, while the averge production from Yemen's Block 9 has reached a level of 4,200 barrels of oil per day (bpd).

On the domestic front, Reliance Industries is planning an aggressive exploration campaign, Ambani said, adding this would take the company to "a higher growth trajectory and transform the energy landscape of India."

"We have planned an aggressive exploration campaign aimed at diversifying our search for new accumulation over the next three years. We plan to drill in majority of our blocks and propose to accelerate our campaign in the Krishna Godavari basin," Ambani said.

"With the new discovery made in the basin, Reliance has had 39 discoveries with an overall success ratio of 52 per cent and a high deepwater success rate of 70 per cent. This is considerably higher than the global average," he added.

The energy major last week announced an oil discovery at a field 130 km away from Ahmedabad in Gujarat, where it has drilled five wells.

This is the company's second major find after the offshore MA field in the Krishna-Godavari basin.

"The major deepwater fields have a combined peak capacity of about 5.5 lakh (550,000) barrels of oil equivalent (boe) per day. This is about 40 per cent of India's current indigenous production," Ambani said.

"At the current price of crude oil of $80 per barrel, it implies a saving of $11 billion (Rs 53,000 crore) per year in energy imports by India," he added.

Ambani said RIL's gas production level has crossed six billion cubic metres (bcm) and the field was slated for plateau production in the second half of this fiscal.

"Oil production from the D26 has 2.8 million barrels with daily peak production expected by the end of the year, Ambani said. Initial field development planning or accelerated monetisation of nine more gas discoveries in this plot is underway. We continue to make aggressive plans in the natural gas sector," Ambani said.

RIL to focus on renewable energy

Reliance will focus on growth in its renewable energy segment and plans to pilot projects in biofuels, solar energy and fuel cells, Ambani said.

"As part of our road-map for value creation, we are entering into the renewable energy space, as a natural extension of our conventional energy platform. Our efforts will be on piloting projects in alternative energy," he told shareholders at the company's 35th annual general meeting.

"Research and proof of concept project in biofuel, solar energy and fuel cells, to understand and enable scale-up, would characterise this effort. Our efforts would be to grow the conventional energy and material platform through greater global scale and competitiveness," he said.

Currently, solar photo-voltaic cells to generate power is considered a costly proposition in India. Although India can produce solar cells with a total capacity of more than 50 MW, it uses less than half of this due to higher cost of generation compared to thermal and wind.

The Solar Group of RIL has already implemented a large electrification programme at the community and village level in Maharashtra in 2007-08.

'Investors, lenders look for performance, not promises'

Industrialist Mukesh Ambani said capital markets now appreciate companies that create real value rather than those that make believe, and likewise performance more than promises help companies raise funds.

Speaking to shareholders at the Annual General Meeting of Reliance Industries, its chairman said that the fundamentals of the business world has changed after the global financial crisis.

"Credit now flocks to companies with performance rather than promise. Capital markets now value companies that create monetary value rather than make-believe value," Ambani said.

Ambani, who also happens to be the main promoter of the country's largest corporate house, further said that even the compensation was now linked to "results rather than work."

He further said that companies were now tending to factor flexibility more than feasibility and new business models driven by new cost structures, partnerships, virtualization and innovation were coming in vogue.

Recognising these changes, he said RIL has "set in motion a business transformation initiative." The company was "developing a new breed of business, operational and functional leaders" and was piloting projects in areas like alternative energy and in support of rural transformation.

"Reliance envisages a multi-fold growth in the near term, with a far more widespread global footprint," he added.

Asserting that "the best of Reliance is yet to come," he said that the company was transforming itself accordingly.