How to make Green Investments in India – Renewable Energy Focused Power Utilities
August 23, 2010How Indian Real Estate Companies Inflate Revenues through Creative Accounting
August 23, 2010Shale Gas is a new Fossil Fuel made economically feasible by the high prices of Oil and Gas.This has attracted the attention of Oil and Gas Majors around the world looking to augment their fast depleting reserves.Relaince Industries which is India’s largest privately owned company has already acquired equity stakes in Three Shale Gas Assets in a short span of One year.Reliance Industries had diversified into upstream production of Crude Oil and Gas after India’s opening up of the Exploration Sector to private participation.The company has a massive Free Cash Flow being generated every year which it is looking to invest through GreenField Expansion.The company has already spent a massive amount in investing in India’s Broadband Wireless Sector.
Reliance Industries spending $3.5 Billion on 3 Shale Gas Acquisitions in North America
Reliance has spent almost $3.5 Billion on Shale Gas Asset Buys in USA.Two of the Acquisitions have rights to Extract Shale Gas from the Marcellus Field which is North America’s Largest.Note Reliance Industries has been looking to grow its footprint but the economic recovery soured its dream of doubling its size through the acquisition of Petrochemicals Giant LyondellBasell.Now Reliance is going berserk in acquiring this “New Fossil Fuel” in order to gain a first mover advantage.Its biggest Shale Gas Buy was a 40% stake of Marcellus Block owned by Atlas Energy.Under the Deal,Reliance will spend $1.7 Billion over the next 5-7 years which can increase to $5 Billion depending on the growth of the business.The company also acquired a 45% stake in a Texas Field for a total payment of $1.35 Billion.Reliance’s overall commitment to Shale Gas pales in front of Exxon Mobil’s $31 Billion Acquisition of Shale Gas Company XTO Energy.Note Reliance will look to quickly assimilate the technology of Shale Gas Extraction which it can leverage in other parts of the world.The Technology is relatively new and most advanced in USA.This is the reason behind acquiring small stakes with different partners.
Summary
Reliance’s Strategy in Shale Gas makes a lot of sense.The Technology is but new and unproven on a long time scale.There have been concerns about the Environment Impact of Shale Gas Extraction.Also low Gas Prices due to the GFC has made the industry growth slowdown.This is a good time to buy Shale Gas Assets relatively cheaply as Economic Recovery will again see Fossil Fuel Prices heading up.
3 Comments
[…] acquire Lyondell Basell which would have nearly doubled the company’s revenues,it started to acquire Shale Gas Assets in North America.These small time buyouts made sense as they are related to Reliance’s core […]
[…] questions raised against the Environmental Safety of the Shale Gas Extraction Process.However the entry of Big Oil and Gas is preventing a fair and unbiased investigation into the harmful effects of Shale Gas.Note a NGO […]
[…] amount of investment from both big and small oil and gas companies globally.Indian companies like Reliance and Chinese Companies have bought stakes in Shage Gas Developments in Pennsylvania to develop […]