BP, Europe's second-largest oil company, is hoping to help Reliance Industries (RIL) find more oil and gas and boost output at the showpiece KG-D6 fields after its $7.2 billion deal, the nation's largest foreign direct investment ever, is cleared by the government.
BP plans to buy 30% stake in 23 oil and gas blocks of RIL, including the eastern offshore Krishna Godavari basin KG-D6 fields in a $7.2 billion deal.
"We believe this partnership will combine BP's world-class deepwater exploration and development capabilities with RIL's project management and operations expertise to help India in its quest for energy security," a BP official said.
RIL had on February 25 made application seeking nod to transfer stake to BP but is still awaiting approval.
"We have submitted the application to take a 30% participating interest in 23 blocks of Reliance in late February and are awaiting Government of India's approval," he said.
RIL has seen output at KG-D6 fall from 61.5 million standard cubic meters per day achieved in March 2010 to less than 48 mmscmd currently due to reservoir problems. It is pinning hopes on BP for reviving sagging output which according to plans should have touched 69 mmscmd by now.
"Through this investment we are looking to partner with RIL and more importantly India in exploration and development in order to provide gas for developing a gas based economy," the BP official said. "The value enhancement will come through the new discoveries and enhanced development of discovered volumes in an efficient manner."
The deal, which also includes RIL and BP setting up an equal joint venture for sourcing and marketing of gas, would give "BP a material and immediate footprint in one of the fastest growing gas markets in the world - India."
Home Ministry on June 1 gave its security clearance to the RIL-BP deal but an approval from the oil ministry was still awaited. There is talk that the ministry may refer the deal to the Cabinet Committee on Economic Affairs, further detailing the approval.
"This alliance allows BP to bring its deepwater experience and knowhow - evolved over many years of working in basins and geology across the world, including robust exploration and development practices," he added.
RIL is the operator in all the 23 blocks, while Canadian Niko Resources and UK's Hardy Oil have minority 10% interest in a few. After the deal, Reliance' holding in the blocks will come down to 60-70%. Nineteen out of 23 blocks lie off the East Coast, while two blocks are onland, in Assam and Gujarat.
