India Approves BP Investment in Reliance Gas Venture

India’s cabinet committee has approved BP’s purchase of a 30 per cent stake in an oil and gas venture with Reliance Industries.

“This transaction is part of BP’s strategy of creating long-term value through alliances with strong national partners, taking material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets,” said Bob Dudley,  BP’s chief executive. “We will now work to complete the commercial agreements for the deal in the next few weeks.”

Initially announced in February, the investment valued at $7.2 billion is one of the largest foreign direct investment ever made in India.

Under the terms of the agreement, BP will pay $7.2bn to take 30 per cent stake in 23 gas blocks which lie offshore, mainly off India’s east coast. The total value of the investment, including the initial payment of $7 billion and performance-related payments and infrastructure investment could amount to $20bn.

At present, the one block in production provides 40 per cent of India’s gas output.