The world’s second largest publicly-traded oil firm, BP Plc, signed a deal with Mukesh Ambani controlled Reliance Industries on 21 February 2011. The deal is believed to have paved the way for India’s largest ever foreign direct investment. According to the deal BP will acquire a 30% stake in Reliance’s 23 oil and gas acreages for $7.2 billion (Rs 32,400 crore) making it the third largest merger and acquisition deal in India.
The transaction includes RIL’s showcase D-6 gas field in the Krishna-Godavari basin off the Andhra coast and Reliance will continue to hold a majority 60-70% stake in these blocks.
The two companies, RIL and BP also decided to form a 50:50 joint venture for sourcing and marketing natural gas.
Apart from paying $7.2 billion (Rs 32,400cr) for stake in acreages BP will invest another $1.8bn (Rs 8,100 cr) if commercially viable oil and gas reserves found. Further investment of $10-11bn (Rs 50,000cr) will be jointly made.
If all three legs of deal work out, BP’s investment of $14.5 bn (Rs 65,000 cr) will be the largest FDI ahead of Posco’s $13 bn.
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