RIL asks govt to expedite approvals for $7.2-bn BP deal
Amidst concerns raised by central intelligence agencies over the $7.2-billion (Rs 32,400-crore) Reliance Industries Ltd (RIL)-BP deal, RIL is pushing for speedy approvals to the deal and has cited BP's entry into India as a "major boost to the energy security of the country." Anupama Airy and Gaurav Choudhury report. RIL rebuts points raised by intelligence agenciesbusiness Updated: Jul 04, 2011 01:33 IST
Amidst concerns raised by central intelligence agencies over the $7.2-billion (Rs 32,400-crore) Reliance Industries Ltd (RIL)-BP deal, RIL is pushing for speedy approvals to the deal and has cited BP's entry into India as a "major boost to the energy security of the country." Mukesh-Ambani led RIL had signed a deal to sell a 30% stake in 23 oil and gas fields to BP.
RIL's letter dated June 10, asking the petroleum ministry to "expedite approvals" for its deal with BP, comes within days of a June-1 note of the ministry of home affairs conveying concerns of intelligence agencies. The agencies had voiced concerns over the handling of a "natural resource" such as gas by a new player with BP's financial muscle, which would not only take away a large chunk of the gas marketing and transportation business of India's national gas carrier GAIL India Ltd, but will also raise the cost of oil and gas for user industries.
While conveying its "security no-objection certificate" to the RIL-BP deal, the home ministry has asked the petroleum ministry to "take into account" these observations while "considering the case."
However, RIL said that "BP's entry will add value to India's exploration and production (E&P) sector…BP's entry as an international oil and gas major with proven deep ater experience will be a major boost to the energy security of India."
RIL has rebutted the intelligence agencies' observation that it needs to be ascertained whether the New Exploration and Licensing Policy (NELP) contract has a provision of sale of assets and whether it allows BP to sell or transport gas outside the country.
The gas marketing joint venture "is not part of NELP and is governed by a different policy framework for which we will obtain necessary approvals from the authorities concerned," RIL has told the petroleum ministry.
A RIL spokesperson said the company does not want to comment on any inter-ministerial communication and the June 10 letter to the petroleum ministry was self-explanatory.
The deal marked one of the biggest foreign direct investments in a single year in India. Europe's second-biggest oil company bought a 30% stake in 23 oil and gas blocks owned by RIL by paying $7.2 billion or Rs 32,400 crore. RIL will get another $1.8 billion if it strikes more oil or gas. However, the petroleum ministry approval is a mandatory pre-requisite for the deal to go through.