Focus on KG-D6 discoveries a long-term positive but Jio key in medium term: Analysts
Global stock brokers said the partnership between Reliance Industries and British Petroleum (BP) to develop discoveries in the KG-D6 block is a positive long term for RIL, but Reliance Jio’s revenue would be essential in the short and medium term. The stock recovered the initial trade losses at Rs 1385.75, down 0.09 percent from the previous close at 11 pm IST 44 hours.
RIL and BP announced Thursday that progress in the development of deepwater gas fields already discovered, resulting in a new gas production to India.
The two companies are awarding contracts for the development of the “R Series” deepwater gas fields in the KG-D6 block off the east coast of India.
The project is expected to produce up to 12 million cubic meters of gas per day, to go into production in 2020, according to the company, adding that the development of three projects with a total investment of Rs 40 billion rupees is expected Resulting in a total of 30.35 million cubic meters of gas per day, with new domestic gas production in line with 2020-2022.
Reliance Industries 60 percent stake in the KG-D6 block, while BP 30 percent and Niko 10 percent.
CLSA | Evaluation Buy | Rs objective 1710
The partnership has also been extended upstream to focus on the commercialization of energy initiatives and new, non-conventional fuel technology to improve customers.
The two companies have also advanced beyond their conventional header collaboration. First, the company will develop in the field of conventional fuel and ATF marketing. Relevantly, BP holds a license for fuels for market-based aviation turbines and introduces 3,500 service stations in India.
Second, the association also plans to examine opportunities for unconventional fuels and low-carbon energy sources. This should include solar, wind and gas, among other things.
Thirdly, the JV will try to use scanning and develop innovative and futuristic solutions to offer disruptive value, which can also be taken in other parts of the world.
The development plan for existing discoveries in D6 is a long-term positive. At the same time, this new JV downstream should remove any doubt as to whether dependency is focused on expanding fuel marketing.
However, short-term activities will be generated by the start of projects valued at more than 40 billion dollars over the next 6 to 9 months. CLSA reiterated the so-called call in action.
Morgan Stanley | Overweight rating | Target Rs 1506
The announcement of the EIR relates to upstream investment, slightly above expectations while working with BP on the expansion of investment in conventional, non-conventional fuels and electrification mobility solutions, sets the tone for the Growth of RIL.
Upstream expansion and gasoline were well established; Overall growth in South Africa is approximately 10% above estimates.
Although there were limited details on collaboration in the retail fuel trade, BP has taken a selective approach to the expansion of the commercial network and believes retailers’ coexist and compete.
Bank of America Merrill Lynch | Neutral rating | Objective Rs 1450
While it is good that RIL has decided to resume the project in D6, which is currently in long-term projects.
The new D6 fields could add $ 1.3 billion (2 percent) to the sum of the RIL shares, but more importantly, stimulate growth of structural gains after ongoing chemical projects (during the period 21-22).
The new energy partnership is still at an early stage and requires a definition. Passing the influx of this will take time.
In the short term, the RIL share should depend on the Reliance Jio equity tax, which will only become evident in September / December 2017. With a potential increase of 5 percent, it remained neutral on the stock exchange.
JPMorgan | Neutral rating | Target Rs 1310
Since both ads are more mid-term impact events, JP Morgan sees a limited increase in short-term stock prices.
Since the first additional gas was not until 2020 and the rise to power would be only in 2022, the research firm knows a limited financial impact until the fiscal year 20.