Reliance sells 30 pc stake in 23 blocks for USD 7.2 bln

New Delhi, Feb 21 (PTI) In one of the country''s biggestenergy deals, Reliance Industries today announced sale of 30per cent stake in its 23 blocks including the giant KG-D6gas fields to UK''s BP Plc for USD 7.2 billion.

Besides the stake transfer, Reliance and BP will form a50:50 joint venture for the sourcing and marketing of gas, thecompanies said in identical statements today.

Reliance has a portfolio of 29 exploration blocks besidesthe 30 per cent interest it holds in the Panna/Mukta and Taptioil and gas fields off the west cost.

Of the 29 exploration blocks it has, Reliance isfarming-out 30 per cent interest in 23 of them including theproducing KG-D6 block which is estimated to hold an inplacereserve of 40 Trillion cubic feet (Tcf).

BP will pay Reliance an aggregate consideration of USD7.2 billion and future performance payments of up to USD 1.8billion.

The companies said these payments and the combined futureinvestments in the 23 blocks could amount to USD 20 billion intotal.

"The partnership will combine BP''s world-class deepwaterexploration and development capabilities with Reliance''sproject management and operations expertise," the statementssaid.

Oil Secretary S Sundareshan said the farm-out of stake inthe blocks awarded under New Exploration Licensing Policy(NELP) transaction will need government approval.

However the nature of the approval will be different fromVedanta Resources'' USD 9.6 billion acquisition of Cairn Indiaas the Reliance-BP deal is a farm-out agreement and not atransfer of control.

In Cairn-Vedanta deal, Cairn Energy Plc of UK istransferring control of its Indian unit to the London-listedmining group, which has no prior experience in oil and gas.

Reliance will retain operatorship of all the 23 blocks.

It currently produces about 50-52 million standard cubicmeters per day of natural gas from its mainstay KG-D6 fieldsoff the Andhra coast.

Niko Resources of Canada has 10 per cent interest in theblock and after the BP deal, Reliance''s stake would fall to 60per cent.

Besides KG-D6, Reliance''s second biggest discovery blockis NEC-25 in the Mahanadi basis off the Orissa coast. It hasso far made 15 exploratory success in the block, where Nikoholds 10 per cent stake. Post BP deal, Reliance stake in thisblock too will fall to 60 per cent.

Reliance has potential resource of 9.5 Tcf in KG-D3 blockwith Hardy Oil. Hardy has 10 per cent interest and Reliance 90per cent. Besides, it has made oil discoveries in Cambayonland block. .