BP inks $7bn Indian deal with Reliance

Marion Dakers
BP has lined up one of the biggest-ever foreign direct investments in India after agreeing to pay Reliance Industries $7.2bn (£4.4bn) to jointly explore deepwater oil and gas deposits in the country.

The long-term deal with Reliance, which could see BP pour $20bn into the project, was sealed at Downing Street yesterday.

BP will take a 30 per cent stake in Reliance’s oil and gas production contracts and set up a joint venture for selling gas in India, the firms said, with further payments dependent on the exploration’s success.

The agreement is BP’s second cross-border exploration deal in as many months.

BP is set to enter arbitration with its partners in TNK-BP next month over its £10bn share swap with Russia’s Rosneft.

“It’s kind of similar to the Russian deal ­– it’s getting access to longer term positions which could be material,” said Oswald Clint from Sanford Bernstein. “But we’ve got a key risk here. The gas price is regulated, it’s not rising as quickly as people expected.”

BP chief executive Bob Dudley told reporters yesterday that Reliance’s exploration spaces contain gas reserves of up to 15 trillion cubic feet, adding: “The whole world’s looking for gas, particularly in Asia... we believe it is going to be a very, very valuable fuel.”

Reliance’s tie-in with BP is still subject to Indian regulatory approval, which has proved a sticking point for other energy investors in the country including Cairn and Vedanta.

Reliance Industries, which runs the world’s biggest refining complex, is controlled by Mukesh Ambani, an Indian tycoon listed last year as the world’s fourth-richest man by Forbes magazine.