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RIL's Oil Strike

Reliance has struck oil in Yemen, of all places. Is it more about sentiments than business?

By Ananya Roy

Yemen: Sentimental strike

Yemen? Yemen isn't an oil-rich country, is it?

It is not. But it has oil. And it is the country where young Dhirubhai Ambani, as India's most amazing rags-to-riches saga has it, once envisioned a vast petrochem empire of his own while working as a petrol station attendant.

Poetic justice it is, then, for Reliance the cloth-to-oil megacorp founded by Ambani to have struck oil in Yemen, of all places.

But that doesn't answer the question of the significance of the find. According to Reliance's chairman Mukesh Ambani, the newly discovered reserves are nothing to sneeze at: it could deliver half the oil the company gets from the Panna-Mukta-Tapti offshore fields near Mumbai.

Now, that is all the information that's available. The size of the find is still being measured, in all likelihood. Will it be big enough to sound the bugles?

Now, Yemen has some 4 billion barrels of proven oil reserves, at least 2.5 billion of it deemed 'recoverable' by the global oil industry. In comparison with its neighbour Saudi Arabia, which sits on 264 billion barrels, Yemen's reservoir is tiny. But still, the country produces nearly half a million barrels of crude oil a day, which is enough to rival India's own domestic production, broadly.

Also, Yemen's oil industry is composed largely of small-rig players, such as Canada's Nexen, which owns a majority stake in Yemen's most voluminous 'block', Masila (which accounts for roughly half the actual production). This, in many ways, is an ideal country for players such as ONGC and Reliance to drill --- it's not big stuff, but it's just enough to invest in to command 'secure' supplies of crude oil, as refinery-owner Reliance might want to. Even if Reliance's Yemen find can cough up some 20,000 barrels per day, it might possibly be worth it. But without any word on the actual numbers involved, it still has the sound of a symbolic venture.

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