Reliance sells 30 pc stake in 23 blocks for USD 7.2 bln

New Delhi, Feb 21 (PTI) In one of the country's biggest
energy deals, Reliance Industries on Monday announced sale of
30 per cent stake in its 23 blocks including the giant KG-D6
gas fields to UK's BP Plc for USD 7.2 billion.
Besides the stake transfer, Reliance and BP will form a
50:50 joint venture for the sourcing and marketing of gas, the
companies said in identical statements on Monday.
Reliance has a portfolio of 29 exploration blocks besides
the 30 per cent interest it holds in the Panna/Mukta and Tapti
oil and gas fields off the west cost.
Of the 29 exploration blocks it has, Reliance is
farming-out 30 per cent interest in 23 of them including the
producing KG-D6 block which is estimated to hold an inplace
reserve of 40 Trillion cubic feet (Tcf).
BP will pay Reliance an aggregate consideration of USD
7.2 billion and future performance payments of up to USD 1.8
billion.
The companies said these payments and the combined future
investments in the 23 blocks could amount to USD 20 billion in
total.
"The partnership will combine BP's world-class deepwater
exploration and development capabilities with Reliance's
project management and operations expertise," the statements
said.
Oil Secretary S Sundareshan said the farm-out of stake in
the blocks awarded under New Exploration Licensing Policy
(NELP) transaction will need government approval.
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.
It 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. MORE PTI