Niko, Hardy give 'no-objection' to the Reliance-BP deal | business | Hindustan Times
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Niko, Hardy give 'no-objection' to the Reliance-BP deal

business Updated: Feb 27, 2011 15:45 IST
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Canada's Niko Resources and Hardy Oil and Gas have given no-objection to their partner Reliance Industries for selling 30% stake in oil and gas blocks like eastern offshore KG-D6 to London-based BP Plc.

Reliance is selling 23 oil and gas blocks which, along with partners like Niko and Hardy, it had won under various rounds of New Exploration Licensing Policy (NELP) since 1999.

The company on February 25 made separate applications for the transfer of 30% stake in these 23 blocks to the oil sector regulator Directorate General of Hydrocarbons (DGH), an official said.

The applications, copy of which was also marked to the oil ministry, were accompanied by a No-Objection Certificate (NOC) from Niko and Hardy, he said.

NELP allows firms to sell or farm-out participating interest (or stakes), subject to 'no-objection' from consortium partners.

Niko has 10-15% stake in three gas discovery blocks of Reliance, including the prolific KG-D6, while Hardy holds 10% each in Krishna Godavari basin D9 and D3 blocks.

By virtue of these stakes, both Niko and Hardy have pre-emption rights. So, the applications that Reliance made for transferring its stake to BP were accompanied by a lot of documents, primary among them being the NOCs of its consortium partners, the official said.

DGH will examine the documents and the applications and if they are found in order, it will forward an in-principal approval to the Petroleum Ministry.

The official said that once the ministry clears the applications, the file will go back to DGH.

Then, DGH will amend the Production Sharing Contract and submit it to the ministry and only after upon its approval will the deal be said to have received the government nod.

The entire process may take at least 2-3 months, the official said.

BP, Europe's second biggest oil company had on February 21 agreed to a USD 7.2 billion deal for buying 30% stake in 23 out of 29 exploration blocks held by Reliance.

BP also agreed to a performance payment of up to USD 1.8 billion if the tie-up leads to the development of commercial discoveries.

Besides the NOCs, Reliance has also submitted resolution of operating committee (OC) of the blocks, allowing entry of BP to the DGH, the official said.

The company has also submitted audited financial statements/annual report for the preceding three years, copy of the deal, copy of its board resolution to sell stake to BP and a draft amendment to the Production Sharing Contract (PSC) reflecting new shareholding.