LONDON -- Reliance Industries and BP have agreed to form a partnership in India. Mukesh Ambani, chairman and managing director of Reliance Industries, and Robert Dudley, BP Group chief executive, signed the relationship framework and transactional agreements in London.
The arrangement gives BP a 30% stake in 23 oil and gas production-sharing contracts that Reliance operates in India, including the producing KG D6 block. The 50-50 joint venture will also cooperate on sourcing and marketing of gas in India, and on creating infrastructure to receive, transport, and market natural gas.
Ambani said: "We are delighted to partner with BP, one of the largest energy majors and one of the finest deepwater exploration companies in the world. This partnership combines the skills of both companies and will be focused on finding more hydrocarbons in the deepwater blocks of India and significantly contribute to India's energy security."
BP Chairman Carl-Henric Svanberg added: "This partnership meets BP's strategy of forming alliances with strong national partners, taking material positions in significant hydrocarbon basins, and increasing our exposure to growing energy markets."
The partnership will be India's largest private sector holder of exploration acreage, BP says, with 23 oil and gas blocks covering 270,000 sq km (102,428 mi), in water depths ranging from 400 m (1,312 ft) to over 3,000 m (9,842 ft). These currently produce around 1.8 bcf/d of gas, representing over 40% of India's total production.
BP will pay Reliance Industries Ltd $7.2 billion for these interests, with further performance payments of up to $1.8 billion payable based on exploration resulting in development of commercial discoveries. These payments and combined investment could reach $20 billion.
Completion of the transactions is subject to Indian regulatory approvals.