BP to buy 30% in RIL's 23 gas blocks

Reliance Industries (RIL) and BP today announced a historic partnership between the two companies, constituting one of the largest foreign direct investments into the country.

The partnership that will extend across the complete gas value chain, with BP taking a 30% stake in 23 oil and gas production sharing contracts that Reliance operates in India is valued at a staggering $7.2 billion.

This partnership includes the producing KG D6 block, and the formation of a 50:50 joint venture between the two companies for the sourcing and marketing of gas in India. The joint venture will also endeavour to accelerate the creation of infrastructure for receiving, transporting and marketing of natural gas in India.

Mukesh Ambani, CMD, RIL and Robert Dudley, Chief Executive, BP Group signed the relationship framework and transactional agreements in London today. According to RIL, this partnership will combine BP’s world-class deepwater exploration and development capabilities with Reliance’s project management and operations expertise.

Commenting on the alliance, Ambani said, “We are delighted to partner with BP, one of the largest energy majors and one of the finest deep water exploration companies in the world. This partnership combines the skills of both companies and will be focused on finding more hydrocarbons in the deep water blocks of India and significantly contribute to India’s energy security.”

For BP, Reliance is a natural partner in India, given its strong position in the Indian market feels Carl-Henric Svanberg, Chairman of BP. He said, “This partnership meets BP’s strategy of forming alliances with strong national partners, taking material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets.”

The transaction will also create India’s largest private sector holder of exploration acreage, considering that the 23 oil and gas blocks together cover approximately 2.70 lakh sq km. However, its completion is subject to Indian regulatory approvals and other customary conditions.

BP's shares were up 0.3% at 494.4 pence at 1108 GMT (1238 IST). RIL shares were up 2%.