UPDATE 1-Reliance in no hurry for more US shale gas JVs

* To spend as much as $4.5 bln to ramp up shale assets

* Says in no hurry to form more such partnerships

* Sees room for improvement in petrochem margins

(Adds details, quotes and background)

By Aniruddha Basu

MUMBAI, Oct 31 (BestGrowthStock) – Conglomerate Reliance Industries
(RELI.BO: ), which announced plans this year to spend $3.4
billion on three U.S. shale gas joint ventures, is in no hurry
to forge more such partnerships for now, a senior company
official said.

Total spending on the three U.S. shale gas projects by
Reliance, India’s most valuable listed firm, will come to about
$4 billion to $4.5 billion by 2014, Chief Financial Officer
Alok Agarwal said on a conference call on Sunday.

“This will all start ramping up in 2011 and hit a plateau
in 2013/14 when we would have between the three partnerships
drilling of about 500-600 wells per year,” he said.

“The peak net cash outflow will be most likely in 2014,” he
said.

Reliance, controlled by billionaire Mukesh Ambani, has no
immediate plans for a fourth U.S. shale gas partnership.

“Our next priority is to consolidate these three, get these
three partnerships to work, get them to scale up, and get them
to be profitable,” Agarwal said.

“We are not really in a hurry to do any new partnerships at
this point of time, but if an exceptional opportunity comes
across we will look at it closely,” he added.

The firm, which recently raised $1.5 billion in an issue of
dollar bonds, may make further borrowings to fund investment in
its shale gas operations.

“The U.S. subsidiary will be capitalised with equity from
the parent company and public market borrowings as debt,”
Agarwal said.

Reliance, which operates the world’s largest refinery
complex and also has interests in telecoms and retail, is
spending between 5 billion rupees ($112.84 million) and 10
billion rupees as capital expenditure per quarter, Agarwal
said.

The firm on Saturday posted its highest quarterly profit in
nearly three years, and increasing output at its main gas field
is seen as key to near-term earnings growth for Reliance.

It expects margins to firm up in its petrochemicals
business, with upside in refining margins also possible,
Agarwal said.

“We have room for improvement in the petrochemical margins.
As we see stability in both the aromatic as well as the polymer
market, our expectations are these margins will improve,” he
said, adding refining margins should hold up at current levels
and may improve if industrial production gathers momentum.

Agarwal declined to give an outlook on when Reliance would
raise output in its key gas block off India’s east coast.

Reliance started pumping gas from its KG D6 block in April
last year, and the company has said it would not increase
output until a full review of the reservoir was completed.

The firm is pumping about 55-60 million cubic metres of
gas a day from KG D6, and the country’s oil secretary said in
July that Reliance would be able to pump gas at full capacity
of 80 mmscmd during the year to March 2013.
(US$=44.4 rupees)
(Editing by Tony Munroe)

UPDATE 1-Reliance in no hurry for more US shale gas JVs