BP this morning announced that the company has forked out US$7.2 billion in a partnership with Mumbai, India-based Reliance Industries to take a 30 percent stake in 23 oil and gas blocks in India.
“Reliance Industries Limited and BP today announced a historic partnership between the two companies. Mr. Mukesh Ambani, Chairman and Managing Director of Reliance Industries Limited, and Robert Dudley, BP Group Chief Executive, signed the relationship framework and transactional agreements in London,” according to the press release distributed by BP today.
This comes as BP scurries out of the Gulf of Mexico, comes under fire for abandoning shore clean-ups far too soon, and is drowning in litigation and ill will from residents most affected by the oil spill. Nevertheless, the show goes on for the British petroleum provider, as contracts that Reliance operates in India, including the producing KG D6 block, and the formation of a 50:50 joint venture between the two companies for the sourcing and marketing of gas in India, accelerates BP’s claims on worldwide deepwater drilling.
The press release went on to say that: “The joint venture will also endeavor to accelerate the creation of infrastructure for receiving, transporting and marketing of natural gas in India.The partnership will combine BP’s world-class deepwater exploration and development capabilities with Reliance’s project management and operations expertise.”
Future performance payments of up to US$1.8 billion could be paid based on exploration success, BP said. These payments and combined investment could amount to US$20 billion.
BP’s confidence in India is evident from the fact that the transaction constitutes one of the largest foreign direct investments into India. The 23 oil and gas blocks together cover approximately 104,247 Sq. Mi. . This will make the partnership India’s largest private sector holder of exploration acreage.
Reliance owns several ultra-deepwater rigs — those classified as rigs drilling 7,500 ft and greater — including one under construction called the Discoverer India which will be able to drill down to 35,000 feet. It is unclear when Discoverer India will be complete, though one would assume it will be available to BP at some point in the future.