BP gets green light to buy 30% stake in Reliance’s oil and gas blocks

BP has been given the green light to purchase a 30% stake in Reliance Industries’ oil and gas blocks at a cost of US$7.2 billion. Reliance reportedly is looking for BP to help them with sub-surface technical issues at its KG-D6 gas fields.  Production at the company’s gas fields has dropped to 48 million standard cubic meters per day, from 61.5 million standard cubic meters per day. While the ministry gave an unconditional approval to the purchase by BP, the ministry did ask Reliance why it had not offered the stake to a state-owned gas utility like GAIL India.  Reliance is looking to use the experience of BP, Europe’s second largest energy company, in deep sea technology to correct reservoir issues at the Dhirubhai I and III gas fields.  BP will purchase a 30% stake in 23 out of the 26 exploration blocks owned by Reliance and pay up to US$1.8 billion to Reliance if the partnership leads to commercial discoveries.  As part of the agreement, BP and Reliance will form a new joint venture to market and transport natural gas in India.  (June 16, 2011)