RIL completes sale of 25% stake in Yemen oil block for $90m

Reliance Industries on Wednesday said it has completed sale of its 25-percent stake in an oil block in Yemen to Indonesia's Medco Energi for about USD 90 million.

RIL's Dubai-based subsidiary Reliance Exploration & Production DMCC "signed the completion documents for divestment of its 25 percent working interest in the Yemen's Block-9 to Medco Yemen Malik Ltd, a wholly-owned subsidiary of PT Medco Energi Internasional Tbk of Indonesia," the company said in a statement.

The firm had announced the sale of its stake in the oil producing block in August. The stake sale followed RIL exiting from two oil blocks in Kurdistan region of Iraq on July 19. RIL had in 2001 won Yemen's Block 9 along with Hood Energy and Calvalley Petroleum Inc. RIL and Hood Energy held 25-percent stake each while Calvalley had the remaining 50
percent.

RIL said the sale agreement with Medco would be effective from January 1. While the agreement is for a 25 percent interest, Medco would effectively have a 21.25 percent participating interest in the block because, under a regulation in Yemen, the contractor of a production-sharing agreement has to accommodate a working interest for the country, which is represented by the Yemen Oil and Gas Company, which will hold a 15-percent stake.

Accordingly, the operator Calvalley Petroleum would have 42.5-percent interest and Hood Oil a 21.25-percent stake. Block 9 lies covers 2,234 square kilometres in the Sayun- Masila basin in Yemen's Hadramaut province, about 350-km north-east of the Yemeni capital, Sana. It is estimated to hold proven plus probable reserves of 58.6 million barrels of oil. RIL would get another USD 5 million if the block produces 10,000 barrels of oil per day. The block currently produces between 6,000 bpd and 6,500 bpd.

A 20-year construction contract was granted over the block by the Yemeni government in 2005 which the joint venture can apply to have extended for a further five years after 2025. After the sale, RIL will be left with interest in blocks 34 and 37 in eastern Yemen where is is investing USD 66 million with its patner Hood.

RIL had in July sold its 80-percent interest in Rovi and Sarta onland blocks in northern Iraq to US oil behemoth Chevron Corp for a reported USD 200 million.The exits are part of the company's overseas asset restructuring wherein it is cutting exposure in exploration blocks to focus on producing properties.

After the exit from Kurdistan and Yemen, RIL now is left with a portfolio of 10 overseas oil and gas assets including two each in Peru, Yemen, Oman and Colombia and one each in East Timor and Australia.