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Reliance-BP completes $7.2 billion deal


Reliance-BP completes $7.2 billion deal
Reliance Industries announced on Tuesday (August 30, 2011), that it has finally completed all the formalities of its deal with British Petroleum which involves the sale of its 30% stake of its 21 oil and gas blocks to BP.

RIL will get $7.2 billion for the stake sale in 21 blocks and could get an additional $1.2 billion as performance payments based on exploration success resulting in the development of commercial deliveries.

However, the stake sale in two more blocks is still due of government's approval for some technical reasons, which will not affect the valuation of $7.2 billion.

BP has already paid $2 billion to Reliance and paid a second cash installment of $2.2 billion (subject to final adjustments) on Tuesday. It will pay the final cash installment of $3 billion on October 3.

“Future performance payments of up to $1.8 billion could also be made. This is the beginning of what we expect to be a long and successful working partnership with Reliance, building on the strengths of each company," said Mr Bob Dudley, BP Chief Executive.

RIL said in a statement that both the companies have also formed a joint venture for marketing the gas, which needs a joint investment of $11 billion which will speed up the creation of infrastructure for receiving, transporting and marketing natural gas.

After this joint venture, both the companies will operate and cover entire spectrum of the gas in India from exploration and production to distribution and marketing.

“The alliance with BP will boost our efforts to realise the true potential of India"s hydrocarbon reserves. The globally renowned expertise of BP and the in-depth domestic experience of Reliance make for a formidable alliance which will deliver unparalleled value for the country in its pursuit of energy security," said RIL chairman and managing director Mukesh Ambani.

Read more about: ril british petroleum oil and gas
Story first published: Wednesday, August 31, 2011, 14:34 [IST]
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