$7.2-bn RIL, BP deal set to get Cabinet nod

The cabinet may consider approval for a deal between Reliance Industries and BP next week, an oil ministry source said on today. HT reports. Reason to celebrate?

The petroleum ministry said on Wednesday that it has recommended the $7.2 billion (Rs 32,400 crore) Reliance-BP deal to the Cabinet Committee on Economic Affairs (CCEA) for an “unconditional approval”.

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The deal gives the British energy major a 30% stake in 23 oil and gas fields in India including RIL’s gas-producing KG-D6.

A senior petroleum ministry official said that the petroleum ministry has the authority to decide on the RIL-BP deal, but it was referred to the Cabinet as it is one of the single largest foreign direct investments.

The Cabinet will take up the issue for a decision next week.

In addition to $7.2 billion, BP will also make a ‘performance payment’ of up to $1.8 billion if the tie-up leads to the development of commercial discoveries. This will take the total size of the RIL-BP deal to $9 billion (Rs 40,500 crore).

Reliance had on February 25 moved the petroleum ministry seeking approval to transfer stake to Europe’s second biggest oil company. On its part, the ministry of home affairs has given a security no-objection certificate (NOC) to the deal.

At present, 100% foreign direct investment is permitted in oil and gas exploration and production (E&P) under the automatic route (without going through the Foreign Investment Promotion Board or the CCEA).

Asked to comment on issues flagged by the home ministry coming from Central intelligence agencies concerning BP’s entry into India’s oil and gas sector, the ministry official said, “all those issues stand addressed and there are no issues.”

BP already operates oil and gas blocks in the country and has a huge lubricant business, and a solar venture with Tata.