Reliance completes $7.2-bn deal with BP

Reliance Industries on Tuesday announced completion of its 30 per cent stake sale in 21 oil and gas blocks, including the showcase KG-D6 block, to British energy giant BP Plc for over $7 billion.

Industrialist Mukesh Ambani-led Reliance Industries said in a statement that the completion of the deal has paved the way for commencement of its strategic alliance in India with BP.

"This significant step will commence the planned alliance which will operate across the gas value chain in India, from exploration and production to distribution and marketing.

"The completion of the deal delivers one of the largest ever foreign direct investments into India," RIL said.

RIL will get $ 7.2 billion for the stake sale in 21 blocks and could get further $1.2 billion as performance payments based on exploration success resulting into development of commercial deliveries.

Commenting on the completion of the deal, RIL chairman and managing director Mukesh Ambani said: "The alliance with BP will boost our efforts to realise the true potential of India's hydrocarbon reserves."

"The globally renowned expertise of BP and the in-depth domestic experience

of Reliance make for a formidable alliance which will deliver unparalleled value for the country in its pursuit of energy security," he added.

RIL said that the two companies would also form a 50-50 joint venture for sourcing and marketing of gas in India which will also accelerate the creation of infrastructure for receiving, transporting and marketing natural gas.

BP Group chief executive officer Bob Dudley said: "This major investment is directly aligned with our strategy of creating long-term value by forming alliances with strong national partners, gaining material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets."

RIL is India's largest private sector company with a turnover of Rs 2,58,651 crore ($58 billion) and net profit of Rs 20,286 crore ($4.5 billion) in the last fiscal ended March 31, 2011.

It had on February 21 agreed to sell 30 per cent stake in 23 out of its 29 oil and gas blocks to BP.

Earlier this month, the company said that it has received the government approval for sale of stake in 21 blocks.

However, the approval has been held back for two blocks -- one a deep sea area off the Orissa coast and the other an onland block in Assam -- over technical issues.