2011-02-28-2011-02-21

To acquire a 30% stake in 23 oil and gas production sharing contracts in new India JV, covering approximately 270,000 square kilometers.

Indian conglomerate Reliance Industries Ltd. and BP Plc, London, (NYSE: BP) have formed a partnership that will create India's largest private-sector holder of exploration acreage, and will also combine BP's deepwater E&P capabilities with Reliance's project management and operations expertise.

Mukesh Ambani, chairman and managing director of Reliance, and Robert Dudley, BP Group chief executive, signed the joint-venture agreements in London on Feb. 21. Payments and combined investment could total US$20 billion.

The partnership comprises BP taking a 30% stake in 23 oil and gas production sharing contracts that Reliance operates in India, including the producing KG D6 Block, and the formation of a 50:50 joint venture between the two companies for the sourcing and marketing of gas in India. The joint venture will also endeavour to accelerate the creation of infrastructure for receiving, transporting and marketing of natural gas in India.

The 23 blocks cover approximately 270,000 square kilometers and water depths range from 400 to more than 3,000 meters. Current production from the blocks is about 1.8 billion cubic feet of gas per day, which is more than 30% of India's total consumption and more than 40% of India's total production. Reliance will continue to operate the production sharing contracts.

BP will pay Reliance an aggregate consideration of US$7.2 billion, and completion adjustments, for the interests to be acquired in the 23 production sharing contracts. Future performance payments of up to US$1.8 billion could be paid based on exploration success that results in development of commercial discoveries.