UPDATE 2-Reliance finds oil in western India; shares up

* First oil find in Cambay basin block in Gujarat state

* Firm sees find opening block's potential

* Raises hopes E&P ops may help offset weak refining margins

* Firm says reports of Ambani brothers settlement baseless

* Shares gain as much as 3.7 pct (Adds details on Ambani dispute, background, analyst comments)

By Pratish Narayanan

MUMBAI, Nov 10 (Reuters) - Energy major Reliance Industries (RELI.BO) has made its first oil find in a western Indian block, boosting hopes the firm's oil and gas exploration business will help offset some of the weakness in the refining sector.

Reliance, India's biggest conglomerate, with interests in petrochemicals, refining, oil and gas exploration and retail, said it made the discovery in its onland exploratory block in the Cambay basin in Gujarat state.

Five wells had been drilled in the area, and the fifth well flowed at a rate of 500 barrels of oil per day (bopd), the company said on Tuesday.