Reliance to Set Up Unit to Invest in Shale Gas
Reliance Industries Limited reportedly has plans to set up a Special Purpose Vehicle (SPV) in an effort to invest in its shale gas ventures.
An official announcement of this venture is likely to be made on June 3rd at the company's annual general meeting.
SPV's are subsidiary company's established corporations who want to finance a large project without putting the entire firm at tremendous risk. It makes transactions more tax efficient and diffuses risk from the parent company.
For Reliance Industries, this move is a deviation from its known tactics of operation when it comes to a big project. Nevertheless, the effort to structure its new line of business - shale gas – in a new way may prove beneficial after all. Reliance will reportedly make an initial investment of $1.5 -2 billion. The transaction would require the permission of the Reserve Bank of India for the proposed vehicle.
RIL ventured into shale gas sector last year, expending $3 billion to acquire joint ventures stakes in interests held by Pioneer Natural Resources, Atlas Energy and Carrizo Oil & Gas.
Source: The Ground Report India
Related reading:
Atlas Energy
Reliance Industries Buys 21% of Atlas’ Appalachian Shale Gas Holdings
Carrizo Oil & Gas
Pioneer Natural Resources
Reliance Pays $1.3B For Interest in Eagle Ford