Apparently the Oil Ministry has sent the proposal to the Cabinet Committee on Economic Affairs (CCEA) on Wednesday, as stated by reports.
The oil ministry has supported the Reliance Industries-BP deal worth Rs $7.2-billion. The deal allows BP to buy stakes in 23 oil and gas blocks currently owned by Reliance Industries. This will be the biggest deal involving a major international oil corporation in Indian oil and gas block.
Last month, in June, the oil ministry saw the cabinet approval for the Cairn-Vedanta deal. And it even took the bold decision of raising fuel prices. Considering the large size of the BP-Reliance Industries deal, the oil ministry has referred it to the CCEA.
The home ministry has given clearance to the BP deal, as per the reports, even though initially there was some reservation over.
Reliance has maintained that the deal will help it to utilize the deep-sea expertise of BP, which help the company improve its gas output from the D6 Block. Further, the duo expect to set up a joint venture (50:50) for gas marketing. Under this the companies will build infrastructure and supply LNG to the rapidly growing domestic market. Combing all of this, the total investment from BP, will be approximately $20 billion, including field development and marketing infrastructure.
Recently, the company, Reliance has been under scrutiny for falling output, then the draft report of the Comptroller and Auditor General (CAG) has questioned the capital expenditure on the gas field.
BP is very enthusiastic about the Indian market. BP's Energy Outlook 2030 states that energy consumption in India grew by 190% over the past 20 years. It is expected that it will be growing at the rate of over 4% per annum and hence likely to grow by 115% over the next 20 years. Meanwhile the demand for gas is expected to grow at nearly 5% each year between 2010 and 2030.
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