RIL sells 30% stake in 23 blocks for USD 7.2 bn to BP

London, Feb 21 (PTI) In the single largest FDI in India,BP Plc today agreed to pay USD 7.2 billion for 30 per centstake in most of Reliance Industries'' oil and gas blocks,including the gigantic eastern offshore KG-D6 fields.

The Europe''s second biggest oil company will pay USD 7.2billion for 30 per cent stake in 23 out of 29 explorationblocks held by Reliance and a performance payment of up to USD1.8 billion if the tie-up leads to the development ofcommercial discoveries.

Besides, Reliance and BP will form a 50:50 joint venturefor sourcing and marketing of gas, including import of LNGinto India, the companies said in identical statements today.

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

"This is the single largest FDI in the history of India,"Reliance Chairman and Managing Director Mukesh Ambani toldreporters here hoping the world''s "best finder of hydrocarbonin deepwater" will help his firm reverse the sagging outputfrom Krishna Godavari-D6 gas fields.

Reliance has seen output at KG-D6 fields fall from over60 million standard cubic meters per day achieved in mid-2010to around 51 mmscmd.

Oil Secretary S Sundareshan in New Delhi said thefarm-out of stake in the blocks awarded under New ExplorationLicensing Policy (NELP) will need the government approval.

"We will examine it on merit when it comes to us," hesaid.

However, the nature of the approval will be differentfrom Vedanta Resources'' USD 9.6 billion acquisition of CairnIndia as the Reliance-BP deal is a farm-out agreement and nota transfer 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.

Ambani said the deal was "of course, subject to necessarygovernment approval".

"All blocks (in the deal) are under NELP which has a welllaid down framework for government approval. We will apply andget approval," he said, adding the transaction is expected toclose in the next financial year.

BP CEO Bob Dudley said his firm was paying equivalent ofUSD 7.50 per barrel. The price paid, he said, was "sensible".

The UK firm expects energy consumption in India to growby more than 4 per cent, with demand for gas rising more than5 per cent.

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