RIL-BP deal to get official sanction today from Cabinet
The $ 7.2 billion deal between Mukesh Ambani owned Reliance Industries Limited (RIL) and Europe's second largest oil company BP Plc, more commonly referred to as the RIL-BP deal, is all set to get an official approval from the Cabinet Committee on Economic Affairs (CCEA), after RIL sought an official sanction from the government body, after consultation with the oil ministry.
Although Oil ministry itself could have approved and officiated the deal; given the magnitude and scale of investment involved both Reliance Industries and Oil ministry felt the need to get Cabinet’s approval on the same. Earlier this week, the finance ministry also gave its nod to the deal which will bring in a staggering investment of $ 7.2 billion, one of the largest ever seen FDI in the energy sector of India.
As a part of this deal, BP will stake 30 per cent share in 23 oil and gas production sharing contracts (PSC) that RIL operates in India, including its much acclaimed KG - D6 block off the east coast of Andhra Pradesh, and a 50:50 joint venture will be framed between the two energy giants for the sourcing and marketing of gas in India.
Reliance had sought an official approval for transfer of 30 per cent stake to BP earlier this February from Directorate General of Hydrocarbons (DGH), oil ministry’s technical arm. Following Cabinet’s sanction, RIL’s stake will come down to nearly 60 per cent, while 30 will go to BP and 10 per cent remains with existing minority partners - Canada’s Niko Resources and UK's Hardy Oil.
Reliance Industries hopes to harness BP’s technical acumen in exploring KG –D6 block more prolifically, and substantially, in wake of energy security concerns. BP’s advanced technical guidance will help explore India’s energy resources more productively, while in return, BP will be able to mark its step in Asia’s second largest energy consuming nation; entering its much lucrative sector of energy exploration and production business.
Tags: Mukesh Ambani , Reliance , Reliance Industries , RIL , Gt
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