Reliance Industries Ltd.

In the biggest foreign direct investment (FDI) into India, BP, the world’s fourth-largest energy company, will pay $7.2 billion for a 30 per cent stake in 23 oil and gas blocks of Reliance Industries Ltd (RIL). The fields include the most prolific KG-D6 off the east coast.
BP would pay RIL $7.2 billion, and completion adjustments, for the interests it would acquire in the 23 production sharing contracts. Future performance payments up to $1.8 billion could be paid based on exploration success resulting in development of commercial discoveries. The two will also enter into a 50:50 joint venture for sourcing and marketing of gas. These payments and the combined investment could amount to $20 billion. The initial payments would start flowing into RIL’s books next financial year. BP is funding the deal from its own cash reserves and expected cash flows from sale of some non-strategic assets. The company recently announced a $22 billion disinvestment plan.

The 23 oil and gas blocks cover approximately 270,000 square kilometres. Reliance will continue to be the operator under the production sharing contracts. The blocks lie in water depths ranging from 400 metres to over 3,000 metres and produce about 1.8 billion cubic feet gas per day, over 30 per cent of India’s consumption and over 40 per cent production.