BP’s Deal with RIL paved way for India’s Largest FDI

BP Plc's deal with RIL to acquire 30% of Reliance's oil and gas acreages provided for India’s largest ever foreign direct investment.

Created On: Feb 23, 2011 11:26 ISTModified On: Mar 22, 2011 17:34 IST

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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