Shale gas biz to turn cash positive in 18-24 mths: RIL CFO
RIL CFO Alok Agarwal says, the company has already invested nearly USD 6.5 billion in shale gas business and expects the business to be cash positive once its reaches the USD 700 million market in EBITDA.
October 15, 2013 / 11:48 IST
Reliance Industries, which posted its first Rs 1 trillion revenue largely due to rupee depreciation and record exports, expects its shale gas business to turn cash positive in 18-24 months, reports CNBC-TV18’s Sajeet Manghat.
RIL CFO Alok Agarwal says, the company has already invested nearly USD 6.5 billion in shale gas business and expects the business to be cash positive once its reaches the USD 700 million market in EBITDA. Shale business EBITDA is currently at USD 291.7 million for the first half of the year.Agarwal says the company's Pioneer Joint Venture (JV) is already cash positive and expects consolidated JVs to start generating cash once large part of the 5000-6000 wells are operational. Currently, around 700 wells are operational.Also read: Reliance Q2 net up 1.5% to Rs 5,490 cr, GRMs at $ 7.7/bbl Reliance says, consolidated EBIT margins for their three core business expanded despite posting other income of Rs 2060 crore. The Petchem business witnessed a margin expansion due to rupee, though rupee had its impact on finance cost and depreciation. It did impact the liquefied natural gas (LNG) imports. The company imports LNG for running it power and utilities business. The company posted lower gross refining margins (GRMs) in Q2 at USD 7.7 per barrel as compared to USD 8.4 per barrel in Q1. GRMs are expected to be softer in Q3 as well given Singapore GRMs are hovering between USD 3-5/bbl. RIL says GRMs were impacted by wider light-heavy differential and wider fuel oil cracks which got offset by higher Brent prices. Singapore GRMs stood at USD 5.4 per barrel in Q2.A steep fall in demand from PSU refiners led to diversion of product to exports. PSU refiners' demand fell by 25-30% in Q2 and expects to see a further subdued demand in Q3 from PSU refiners. The domestic demand for diesel and LPG have steeply fallen in Q2. Moreover, retail EBITDA in Q2 was at Rs 95 crore. Volumes in retail were impacted by Jewellery business led by gold sales. Stir in Andhra Pradesh too impacted volumes, says Reliance. RIL plans long-term borrowing for majority of the Rs 1.5 lakh crores capex that it has planned over the next 3 years. Alok Agarwal says, “Company is conscious not to borrow anything above 5 percent in USD loans.” At the end of Q2, it has a total debt of Rs 84,000 crores while cash in hand stood at Rs 90,000 crores.The company says it has submitted plans for exploration and production (E&P) with the government and also seek pricing clarity on gas from the government. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
