March 16, 2010 / 12:55 PM / 7 years ago

UPDATE 2-India's Reliance in running for Marcellus JV-source

* Reliance seeking JV with U.S.-based Atlas Energy-source

* JV to develop Atlas Marcellus Shale operations-source

* Deal could bring in $1 bln or more for Atlas

(Adds details, background)

By Pratish Narayanan

MUMBAI, March 16 (Reuters) - Indian energy major Reliance Industries (RELI.BO) is seeking a joint venture with Atlas Energy ATLS.O to develop the U.S. firm's Marcellus Shale gas operations, a source with direct knowledge of the matter said.

Independent oil and gas company Atlas is looking for a partner for its operations in the booming Marcellus Shale in the eastern United States, which could bring in $1 billion or more for the firm. [ID:nN24197093]

Reliance, India's largest listed firm, is eyeing a deal in the wake of two recent failures in trying to gain a foothold outside India, as it attempts to break into new markets and expand its various businesses including refining, oil and gas exploration and petrochemicals.

The Marcellus Shale, which spans parts of Pennsylvania, West Virginia and New York, could hold enough natural gas to satisfy U.S. demand for a decade, according to some geologists.

Analysts have said Reliance, controlled by the world's fourth-richest man Mukesh Ambani, should seek oil and gas assets overseas as these can feed the company's massive refining complex in western India.

The company has raised $2 billion by selling stock in recent months, a warchest it could put to use for its ambitious overseas plans.

Reliance, founded by Ambani's father Dhirubhai, a school teacher's son, has not met with much success yet in its foreign takeover attempts.

Bankrupt petrochemicals firm LyondellBasell [ACCEIN.UL] recently rejected a bid from Reliance that valued the target at about $14.5 billion, and the Indian firm also lost a race for Canadian oil sands firm Value Creation, in which it wanted to take a majority stake for $2 billion. [ID:nSGE6270CQ] [ID:nSGE62F090]

In late 2008, Reliance commissioned a 580,000 barrels per day (bpd) refinery next to its existing 660,000 bpd plant at Jamnagar in the western Indian state of Gujarat. Together, the plants make up the world's largest oil refining complex. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For a NEWSMAKER on Mukesh Ambani, click [ID:nSGE62304N]

For a FACTBOX on Reliance, click [ID:nBOM516811] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Atlas' core Marcellus position consists of 266,000 acres largely in southwestern Pennsylvania. Bidders for the Atlas position should include large international integrated oil and gas companies as well as domestic independent oil and gas companies, sources have told Reuters.

In a similar deal, Japan's Mitsui & Co Ltd (8031.T) MITSY.O paid $1.4 billion to become a joint venture partner with Anadarko Petroleum Co (APC.N) in the Marcellus. In that deal, Mitsui paid around $14,000 an acre for about 100,000 acres in north-central Pennsylvania.

In 2008, Chesapeake Energy Corp (CHK.N) sold 32.5 percent of its holdings in the project to Norway's Statoil (STL.OL) for $3.375 billion.

Atlas could not be immediately reached for a comment. Reliance declined to comment.

Shares in Reliance, with a market value of about $74 billion, rose 3.8 percent to 1,066.80 rupees in a Mumbai market .BSESN that gained 1.3 percent on Tuesday in India.

Atlas Energy shares were up 1.5 percent at $34.63 in early morning trade Tuesday on Nasdaq. (Additional reporting by Michael Erman in NEW YORK; Editing by Tony Munroe and Aradhana Aravindan)

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