The much acclaimed deal between Mukesh Ambani owned Reliance Industries Limited (RIL) and London based energy major BP has moved yet another step towards realization of the RIL-BP venture with BP handing out $ 2 billion, a part of the $ 7.2 billion deal, to RIL for acquiring participating interest in the Indian energy major’s 23 oil and gas blocks.
This partnership will see BP taking a 30 per cent stake in 23 oil and gas production sharing contracts (PSC) that RIL operates in India, including the much acclaimed KG - D6 block off the east coast of Andhra Pradesh, and the formation of a 50:50 joint venture between the two companies for the sourcing and marketing of gas in India. The JV will also soon amp up the process of formation of infrastructure for receiving, transporting and marketing of natural gas in India.
For now, RIL-BP deal awaits the official nod from the Cabinet Committee on Economic Affairs (CCEA), as RIL seeks an official approval from the central body on the stakes of the deal. The petroleum ministry has already sanctioned the deal, but given its magnitude, Reliance seeks an official sanction from the cabinet. RIL had requested granting of approval earlier this February and although according to constitutional amendment that suggests government consent as ‘deemed’ in the event it has not provided a consent in the stipulated time period of 120 days from the day of request, the oil ministry and RIL both feel it is appropriate to have a written approval outlined by the cabinet.
RIL-BP will see the two world major come together to engage in prolific exploration of deep sea reserves. Spanning the length of over 270,000 square kilometers, the deal covering 23 oil and gas blocks will make the partnership India’s largest private sector holder of exploration acreage. While Reliance benefits from BP’s technical assistance, BP will mark its entry into one of world’s most energy rich economies.