BP announces $7.2 billion partnership in India

February 21st, 2011 - 11:29 pm ICT by BNO News  

LONDON (BNO NEWS) — BP on Monday announced a historic oil and gas transformational partnership with India’s Reliance Industries Limited valued at $7.2 billion.

Under the terms of the agreement, BP will take a 30 percent stake in 23 oil and gas production sharing contracts that Reliance operates in India. In addition, the two companies set a 50:50 joint venture for the sourcing and marketing of gas in India.

“We are delighted to partner with BP. This partnership combines the skills of both companies and will be focused on finding more hydrocarbons in the deep water blocks of India and significantly contribute to India’s energy security,” said Mukesh Ambani, Chairman and Managing Director of Reliance Industries Limited.

The joint venture will also accelerate the creation of infrastructure for receiving, transporting and marketing of natural gas in India. The transformational partnership will combine BP’s world-class deepwater exploration and development capabilities with Reliance’s project management and operations expertise.

“This partnership meets BP’s strategy of forming alliances with strong national partners, taking material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets,” said Carl-Henric Svanberg, Chairman of BP.

BP will pay Reliance $7 .2 billion for the interests to be acquired in the 23 production sharing contracts. An additional $1.8 billion could be paid based on exploration success that results in development of commercial discoveries. The total combined investment could amount to $20 billion.

This transaction represents one of the largest foreign direct investments into India. The 23 oil and gas blocks cover approximately 270,000 square kilometers, making this partnership India’s largest private sector holder of exploration acreage.

“India is one of the fastest growing economies in the world. By allying ourselves with Reliance, we will access the most prolific gas basin in India and secure a place in the fast growing Indian gas markets, creating a genuinely distinctive BP position,” said Robert Dudley, BP Group Chief Executive.

Completion of the transactions is subject to Indian regulatory approvals and other customary conditions. BP has been working with Reliance since December 2008 on the D-17 deepwater block in the Krishna Godavari basin on the east coast of India.

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