India's top private energy group, Reliance Industries Ltd, signalled a major shift in growth strategy on Wednesday, saying it was on the prowl for world-scale acquisitions of up to $15 billion as soon as next year. Reliance, controlled by India's wealthiest man, Mukesh Ambani, has grown into one of the world's leading refiners and petrochemical firms by following an organic path, while powerful Indian peers such as Tata Group expanding aggressively overseas.
But that may be about to change, Atul Chandra, the president of Reliance's international oil business, said at the Reuters India Investment Summit. "We would be looking at major acquisitions, there is no question, because our growth cannot come only in the organic. We are always looking at opportunities where we find hidden value," he said. "All companies look for acquisitions all the time, but I can say that we would look more seriously from this year onward." "If we do something it will be world scale, it will be a major acquisition ... Such acquisitions could be in excess of $10 billion to $15 billion," said Chandra, who leads the global hunt for oil and gas assets for India's biggest listed firm.
He did not say whether the company would be more likely to buy into upstream exploration or production assets, or to expand its core downstream refining and petrochemical activities. Reliance finished building its 660,000 barrels-per-day (bpd) export-oriented refinery in western India in 2000, and next year subsidiary Reliance Petroleum will commission an adjacent plant that will lift joint capacity to over 1.2 million bpd, making it the biggest such complex in the world.
With growing crude oil demand Reliance, which has a market capitalisation of more than $100 billion, needs to boost overseas output to help ensure supplies, he said. "We would like to have oil production close to 400,000 bpd for ourselves, as a part of supply security for the refinery," said Chandra, who led the successful overseas expansion of state-owned ONGC Videsh in the 1990s. "We hope 100,000 bpd should be available from India. Therefore I should look at another 300,000 bpd overseas." Reliance could begin looking for more refining deals once the $6 billion refinery project is finished in mid-2008, he said. "At this time when the construction is on the peak we would not like to divert our resources, but we would like to look for such opportunities in four to five months," he said.
Tata Steel Ltd made corporate India's biggest-ever overseas takeover with its $13 billion purchase of Corus this year, but Reliance's acquisitions -- such as Malaysian polyester maker Hualon for a reported $250 million this year -- have been of a far smaller scale. In 2005, it was linked to a possible bid for Innovene, oil major BP Plc's
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