The government on Friday cleared the $7.2-billion (Rs 32,400 crore) deal for Mukesh Ambani controlled Reliance Industries Limited (RIL) to sell a 30% stake in 23 of its oil and gas blocks to Britain's BP Plc.
"We have approved the deal between RIL and BP today," petroleum minister Jaipal Reddy told reporters after a meeting of the Cabinet Committee on Economic Affairs (CCEA) that approved the deal.
The deal includes divesting stake in the prized KG-D6 gas field in Andhra Pradesh, besides other blocks.
The petroleum ministry will give its nod for two blocks - one a deep sea area off the Orissa coast and other an onland block in Assam - after technical issues such as exploration status are addressed, Reddy said.
"RIL wanted to transfer interest in 23 blocks. But our ministry recommended only 21 blocks. For technical reasons, we did not recommend two other blocks," he said.
The plan that also involves joint exploration could eventually take the total investment value to $20 billion (Rs 90,000 crore) over the next few years.
"We welcome the Indian Government's approval for our alliance with Reliance Industries, partnering with India in its quest for energy security," said Bob Dudley, BP Group chief executive.
"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," he said.
The deal was cleared five months after it was announced in February amid reports of concerns expressed by central intelligence agencies, though the home ministry had given its "no objection" to the transaction.
"This transaction will not only bring investment, it would also mean transfer of vast technical expertise to India's hydrocarbon sector," Reddy said.
Besides the stake transfer, the two firms announced a 50:50 joint venture for sourcing and marketing of gas.