RIL, BP start strategic alliance in India
30 August 2011
Reliance Industries (RIL) has completed the process of the $7-billion sale of a 30 per cent stake in the 21 oil and gas blocks, including the prolific KG-D6 block, to British energy giant BP Plc.
This planned alliance will operate across the gas value chain in India, from exploration and production to distribution and marketing. The deal marks one of the largest ever foreign direct investments into India.
The two companies will also form a 50:50 joint venture for the sourcing and marketing of gas in India, which will also accelerate the creation of infrastructure for receiving, transporting and marketing natural gas, RIL 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," Mukesh Ambani, chairman and managing director of Reliance Industries, said.
"This is the beginning of what we expect to be a long and successful working partnership with Reliance, building on the strengths of each company," said Bob Dudley, BP group chief executive. "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," he added.
BP will pay RIL an aggregate consideration of $7.2 billion subject to completion adjustments for the interests to be acquired in the 21 production sharing contracts. Further performance payments of up to $1.8 billion could be paid based on exploration success that results in development of commercial discoveries.