Reliance Industries (RIL) has rallied 5% at Rs 1,000 after the company and BP, the world’s fourth-largest energy company, announced a partnership under which BP will acquire a 30% stake in several contracts operated by Reliance Industries in India for $7.2 billion. This is the biggest foreign direct investment (FDI) into India.
Under the terms of the deal, BP will take a position in 23 oil and gas production sharing contracts that Reliance operates in India. The oil and gas blocks cover roughly 270,000 square kilometers, making the partnership India’s largest private sector holder of exploration acreage.
The contracts include the KG D6 block and the formation of a 50:50 joint venture for sourcing and marketing gas in India.
“The partnership will focus on finding more hydrocarbons in the deep water blocks of India, with the goal being to “significantly contribute to India’s energy security,” said Mukesh Ambani, chairman of RIL.
In addition to the aggregate fee, BP will be responsible for future performance payments of up to $1.8 billion, which will reflect certain milestones based on the success of exploration and development of commercial discoveries. The payments, along with combined investment, could amount to $20 billion, the company said in a filing to the stock exchanges.
Around 1.35 million shares have changed hands on the RIL counter in opening deals on the NSE and the BSE.