Govt okays BP's acquiring 30 pc stake in Reliance Gas blocks

New Delhi, July 23: After nearly five months wait, the Government on Friday, Jul 22 approved BP Plc's acquiring of 30 per cent stake in 21 of the planned 23 oil and gas blocks of Reliance Industries Ltd (RIL) for USD 7.2 billion.

While stake sale in showpiece KG-D6 gas and discovery area NEC-25 was approved, nod for inconsequential two blocks - one a deep sea area off the Orissa coast and other an onland block in Assam -- will be given by the oil ministry after technical issues like exploration status are sorted out, Oil Minister S Jaipal Reddy told reporters here.

"The Cabinet Committee on Economic Affairs (CCEA) today approved the proposal to grant consent for transfer of 30 per cent participating interest of RIL to BP Exploration (Alpha) Ltd (a unit of Europe''s second-largest oil company)," he said after the Cabinet panel made an exception to holding its meeting a day after the Union Cabinet had its regular meet.

CCEA could not meet as agenda could not be circulated well in time.

"RIL wanted to transfer interest in 23 blocks. But our ministry recommended only 21 blocks. For technical reasons, we did not recommend two other blocks," he said.

BP will have to furnish a bank guarantee and performance guarantee as per the production sharing contract.

The deal, that may increase to USD 20 billion with future performance payments and investment, will give Reliance access to BP's expertise in deep-water drilling and accelerate development and production at its fields particularly the under-performing eastern offshore KG-D6.

For BP, which has been struggling to come out from the disastrous Gulf of Mexico oil-spill disaster last year, the transaction is a chance to enter a market where energy demand is growing at 5-8 per cent.

PTI