ID :
162824
Mon, 02/21/2011 - 19:55
Auther :
Shortlink :
https://oananews.org//node/162824
The shortlink copeid
RIL sells 30% stake in 23 blocks for USD 7.2 bn to BP
London (PTI) In the single largest FDI in India,
BP Plc on Monday agreed to pay USD 7.2 billion for 30 per cent
stake 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 7.2
billion for 30 per cent stake in 23 out of 29 exploration
blocks held by Reliance and a performance payment of up to USD
1.8 billion if the tie-up leads to the development of
commercial discoveries.
Besides, Reliance and BP will form a 50:50 joint venture
for sourcing and marketing of gas, including import of LNG
into India, the companies said in identical statements.
They said these payments and the combined future
investments in the 23 blocks could amount to USD 20 billion in
total.
"This is the single largest FDI in the history of India,"
Reliance Chairman and Managing Director Mukesh Ambani told
reporters here hoping the world's "best finder of hydrocarbon
in deepwater" will help his firm reverse the sagging output
from Krishna Godavari-D6 gas fields.
Reliance has seen output at KG-D6 fields fall from over
60 million standard cubic meters per day achieved in mid-2010
to around 51 mmscmd.
Oil Secretary S Sundareshan in New Delhi said the
farm-out of stake in the blocks awarded under New Exploration
Licensing Policy (NELP) will need the government approval.
"We will examine it on merit when it comes to us," he
said.
However, the nature of the approval will be different
from Vedanta Resources' USD 9.6 billion acquisition of Cairn
India as the Reliance-BP deal is a farm-out agreement and not
a transfer of control.
In Cairn-Vedanta deal, Cairn Energy Plc of UK is
transferring control of its Indian unit to the London-listed
mining 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 necessary
government approval".
"All blocks (in the deal) are under NELP which has a well
laid down framework for government approval. We will apply and
get approval," he said, adding the transaction is expected to
close in the next financial year.
BP CEO Bob Dudley said his firm was paying equivalent of
USD 7.50 per barrel. The price paid, he said, was "sensible".
The UK firm expects energy consumption in India to grow
by more than 4 per cent, with demand for gas rising more than
5 per cent.
"The partnership will combine BP's world-class deepwater
exploration and development capabilities with Reliance's
project management and operations expertise," the statements
said.
RELIANCE-2NDLD-BP 2
The USD 7.2 billion deal is seen as the biggest FDI into
India. Other proposed big transaction--Posco's 12 billion
investment announced years ago for a steel plant in Orissa--
is yet to take off.
Describing the deal with BP as "transformational
partnership", Ambani said BP will help in higher recovery and
unlock "huge potential of vast but unexplored" acreage on the
east coast.
Stating that BP and Reliance had been in discussions
since late 2007, Dudley said BP had set aside financial
resources to meet the firm's financial obligation in the US
oil spill case and has also done so for this deal. He did not
elaborate.
BP, which last year sold its assets in Pakistan as part
of USD 22 billion in disposals worldwide to help pay for the
Gulf of Mexico spill, had earlier this year agreed to explore
an area of Russia's Arctic waters about the size of the UK
North Sea with OAO Rosneft.
Reliance is the operator in all the 23 blocks while
Canadian Niko Resources and UK's Hardy Oil have minority 10
per cent interest in a few. After the deal, Reliance holding
in the blocks will come down to 60-70 per cent. 19 out of 23
blocks lie off the east coast while two blocks are onland in
Assam and Gujarat.
Ambani said Reliance wanted a single long term partner
instead of seeking separat partner for every block. "We expect
to rigourously explore and find more hydrocarbon resources."
"In Reliance's assessment, BP is the best finder of
hydrocarbon in deepwater in the world," he said.
Reliance currently produces about 50-52 million standard
cubic meters per day of natural gas from its mainstay KG-D6
fields off the Andhra coast. Niko Resources of Canada has 10
per cent interest in the block and after the BP deal,
Reliance's stake would fall to 60 per cent.
Besides KG-D6, Reliance's second biggest discovery block
is NEC-25 in the Mahanadi basis off the Orissa coast. It has
so far made 15 exploratory success in the block, where Niko
holds 10 per cent stake. Post BP deal, Reliance stake in this
block too will fall to 60 per cent.
Reliance has potential resource of 9.5 Tcf in KG-D3 block
with Hardy Oil. Hardy has 10 per cent interest and Reliance 90
per cent. Besides, it has made oil discoveries in Cambay
onland block.
Its equal joint venture with BP will also endeavour to
accelerate the creation of infrastructure for receiving,
transporting and marketing of natural gas in India.
The 23 oil and gas blocks together cover approximately
270,000 square kilometres.
Ambani said: "This partnership combines the skills of
both companies and will be focused on finding more
hydrocarbons in the deep water blocks of India and
significantly contribute to India's energy security."
For BP, Reliance is a natural partner in India, given its
strong position in the Indian market.
"Completion of the transactions is subject to Indian regulatory
approvals and other customary conditions," the statements said.
Reliance-BP joint venture will also endeavour to accelerate the creation of infrastructure for receiving, transporting and marketing of natural gas in India.
The 23 oil and gas blocks together cover approximately 2,70,000
square kilometres.
Reliance Chairman and Managing Director Mukesh Ambani said: "This partnership combines the skills of both companies and will be focused on finding more hydrocarbons in the deep water blocks of
India and significantly contribute to India's energy security." For BP, Reliance is a natural partner in India, given its strong position in the Indian market.
"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," said Carl-Henric Svanberg, Chairman of BP. Reliance has more than 25 blocks in the East coast - in the Mahanadi basin, the Krishna-Godavari basin and the Cauvery-Palar basin. In KG-D6 block, Reliance has so far made 27 oil and gas discoveries, of which it has put two gas discoveries - Dhirubhai-1 and 3, and one oil find - MA - into production.
It had in 2008 submitted development plan for nine satellite gas discoveries around Dhirubhai-1 and 3. In 2009, it withdrew this and submitted an optimised development plan for prioritising
four satellite gas discoveries to the Directorate General of Hydrocarbons (DGH).
An integrated development plan for all gas discoveries in the
block KG-D6 is being conceptualised to maximise capital efficiency and
accelerate monetisation."By allying ourselves with Reliance, we will
access the most prolific gas basin in India and secure a place in the fast growing Indian gas markets, creating a genuinely distinctive BP position,," said BP CEO Dudley. "BP looks forward to a long and successful working partnership with Reliance."
BP Plc on Monday agreed to pay USD 7.2 billion for 30 per cent
stake 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 7.2
billion for 30 per cent stake in 23 out of 29 exploration
blocks held by Reliance and a performance payment of up to USD
1.8 billion if the tie-up leads to the development of
commercial discoveries.
Besides, Reliance and BP will form a 50:50 joint venture
for sourcing and marketing of gas, including import of LNG
into India, the companies said in identical statements.
They said these payments and the combined future
investments in the 23 blocks could amount to USD 20 billion in
total.
"This is the single largest FDI in the history of India,"
Reliance Chairman and Managing Director Mukesh Ambani told
reporters here hoping the world's "best finder of hydrocarbon
in deepwater" will help his firm reverse the sagging output
from Krishna Godavari-D6 gas fields.
Reliance has seen output at KG-D6 fields fall from over
60 million standard cubic meters per day achieved in mid-2010
to around 51 mmscmd.
Oil Secretary S Sundareshan in New Delhi said the
farm-out of stake in the blocks awarded under New Exploration
Licensing Policy (NELP) will need the government approval.
"We will examine it on merit when it comes to us," he
said.
However, the nature of the approval will be different
from Vedanta Resources' USD 9.6 billion acquisition of Cairn
India as the Reliance-BP deal is a farm-out agreement and not
a transfer of control.
In Cairn-Vedanta deal, Cairn Energy Plc of UK is
transferring control of its Indian unit to the London-listed
mining 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 necessary
government approval".
"All blocks (in the deal) are under NELP which has a well
laid down framework for government approval. We will apply and
get approval," he said, adding the transaction is expected to
close in the next financial year.
BP CEO Bob Dudley said his firm was paying equivalent of
USD 7.50 per barrel. The price paid, he said, was "sensible".
The UK firm expects energy consumption in India to grow
by more than 4 per cent, with demand for gas rising more than
5 per cent.
"The partnership will combine BP's world-class deepwater
exploration and development capabilities with Reliance's
project management and operations expertise," the statements
said.
RELIANCE-2NDLD-BP 2
The USD 7.2 billion deal is seen as the biggest FDI into
India. Other proposed big transaction--Posco's 12 billion
investment announced years ago for a steel plant in Orissa--
is yet to take off.
Describing the deal with BP as "transformational
partnership", Ambani said BP will help in higher recovery and
unlock "huge potential of vast but unexplored" acreage on the
east coast.
Stating that BP and Reliance had been in discussions
since late 2007, Dudley said BP had set aside financial
resources to meet the firm's financial obligation in the US
oil spill case and has also done so for this deal. He did not
elaborate.
BP, which last year sold its assets in Pakistan as part
of USD 22 billion in disposals worldwide to help pay for the
Gulf of Mexico spill, had earlier this year agreed to explore
an area of Russia's Arctic waters about the size of the UK
North Sea with OAO Rosneft.
Reliance is the operator in all the 23 blocks while
Canadian Niko Resources and UK's Hardy Oil have minority 10
per cent interest in a few. After the deal, Reliance holding
in the blocks will come down to 60-70 per cent. 19 out of 23
blocks lie off the east coast while two blocks are onland in
Assam and Gujarat.
Ambani said Reliance wanted a single long term partner
instead of seeking separat partner for every block. "We expect
to rigourously explore and find more hydrocarbon resources."
"In Reliance's assessment, BP is the best finder of
hydrocarbon in deepwater in the world," he said.
Reliance currently produces about 50-52 million standard
cubic meters per day of natural gas from its mainstay KG-D6
fields off the Andhra coast. Niko Resources of Canada has 10
per cent interest in the block and after the BP deal,
Reliance's stake would fall to 60 per cent.
Besides KG-D6, Reliance's second biggest discovery block
is NEC-25 in the Mahanadi basis off the Orissa coast. It has
so far made 15 exploratory success in the block, where Niko
holds 10 per cent stake. Post BP deal, Reliance stake in this
block too will fall to 60 per cent.
Reliance has potential resource of 9.5 Tcf in KG-D3 block
with Hardy Oil. Hardy has 10 per cent interest and Reliance 90
per cent. Besides, it has made oil discoveries in Cambay
onland block.
Its equal joint venture with BP will also endeavour to
accelerate the creation of infrastructure for receiving,
transporting and marketing of natural gas in India.
The 23 oil and gas blocks together cover approximately
270,000 square kilometres.
Ambani said: "This partnership combines the skills of
both companies and will be focused on finding more
hydrocarbons in the deep water blocks of India and
significantly contribute to India's energy security."
For BP, Reliance is a natural partner in India, given its
strong position in the Indian market.
"Completion of the transactions is subject to Indian regulatory
approvals and other customary conditions," the statements said.
Reliance-BP joint venture will also endeavour to accelerate the creation of infrastructure for receiving, transporting and marketing of natural gas in India.
The 23 oil and gas blocks together cover approximately 2,70,000
square kilometres.
Reliance Chairman and Managing Director Mukesh Ambani said: "This partnership combines the skills of both companies and will be focused on finding more hydrocarbons in the deep water blocks of
India and significantly contribute to India's energy security." For BP, Reliance is a natural partner in India, given its strong position in the Indian market.
"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," said Carl-Henric Svanberg, Chairman of BP. Reliance has more than 25 blocks in the East coast - in the Mahanadi basin, the Krishna-Godavari basin and the Cauvery-Palar basin. In KG-D6 block, Reliance has so far made 27 oil and gas discoveries, of which it has put two gas discoveries - Dhirubhai-1 and 3, and one oil find - MA - into production.
It had in 2008 submitted development plan for nine satellite gas discoveries around Dhirubhai-1 and 3. In 2009, it withdrew this and submitted an optimised development plan for prioritising
four satellite gas discoveries to the Directorate General of Hydrocarbons (DGH).
An integrated development plan for all gas discoveries in the
block KG-D6 is being conceptualised to maximise capital efficiency and
accelerate monetisation."By allying ourselves with Reliance, we will
access the most prolific gas basin in India and secure a place in the fast growing Indian gas markets, creating a genuinely distinctive BP position,," said BP CEO Dudley. "BP looks forward to a long and successful working partnership with Reliance."
