A day after Reliance Industries and BP Plc announced the country's single-largest FDI deal, the Oil Ministry on Tuesday said the transaction has brought in the elusive energy major to aid of the country's oil and gas hunt and will help attract foreign firms to New Exploration Licensing Policy-IX bid rounds.Oil Secretary S Sundareshan said the deal was validation of oil and gas reserves in India and the east coast in particular.
The Europe's second-biggest oil company, BP, will pay $7.2 billion for a 30 per cent stake in 23 out of 29 exploration blocks held by Reliance Industries and a performance payment of up to $1.8 billion if the tie-up leads to the development of commercial discoveries.
"The Ministry of Petroleum and Natural Gas has two roles - one of the regulator and the other being a dynamic role of promoting innovation and development," he said in New Delhi.
The entry to a credible deepwater exploration and production firm in India is an "extremely positive" development that will further help attract oil majors, he said, adding that he expects a good response to the 9th bid round for oil and gas acreage under the NELP.
"If the deal goes through, subject to meeting necessary conditions and getting government approval, the deal has many positives. It is perhaps the largest single FDI in any sector," Sundareshan said.
Assignment of participating interest or farm-out of stake in blocks like the eastern offshore KG-D6 blocks is permissible under NELP, he said. All of 23 blocks Reliance is giving stake to BP had been won under NELP.
"As and when the parties apply to us we will examine on merit and come to a view as quickly as possible," he said.
The Reliance-BP deal will need government approval to consummate but the transaction is not on the same footing as the Vedanta Resources buying out Cairn India.
"Reliance Industries or any other operator can assign its participating interest to a third party subject to government approval. As and when RIL makes required application, Ministry of Petroleum and Natural Gas will examine it on merit and take a decision as expeditiously as possible," he said.
Farm-out of interest under the NELP, the regime under which Reliance won the 23 blocks, is allowed and company farming out (or in simple terms selling out) interest is required to make an application to the regulator Directorate General of Hydrocarbons.
However, the nature of the approval will be different from Vedanta Resources' $9.6 billion acquisition of Cairn India as the deal announced on Monday is not transfer of control.
In Cairn-Vedanta deal, Cairn Energy Plc of UK is transferring control of its Indian unit to the London-listed mining group, which has no prior experience in oil and gas.
