The Union Petroleum and Natural Gas Ministry has decided to refer the $7.2-billion deal of Britain's BP buying 30 per cent stake in Mukesh Ambani-owned Reliance Industries Ltd.'s oil and gas blocks to the Cabinet Committee on Economic Affairs (CCEA) for final approval.
The Union Home Ministry has already given its clearance to the deal and now the Petroleum Ministry has decided to approach the CCEA to take a call on giving approval to the deal despite the Ministry being competent to approve the same. The deal involves RIL selling 30 per cent interest to BP in 23 exploration blocks, including eastern offshore KG-D6 gas fields.
Petroleum Ministry Officials said RIL had on February 25 made a formal application to the Petroleum Ministry for approval of the deal. At present, 100 per cent foreign direct investment is permitted in the oil and gas exploration and production sector under the automatic route. Although the Home Ministry had given a clearance to the deal, it had sent a note to the Petroleum Ministry on June 1 seeking to know if the New Exploration Licensing Policy (NELP), under which RIL won blocks like KG-D6, provided for sale of interest and if BP could take oil and gas produced from the area outside the country, as per the extant rules. NELP provides for the farm-out of interest and several firms have done so in the past, including Cairn India, which sold 90 per cent stake in the KG-DWN-98/2 block adjacent to the KG-D6 fields to Oil and Natural Gas Corporation in 2005. However, the present law does not permit BP to take oil or gas out of the country.
The Home Ministry had also asked if RIL could not have offered the stake to state-owned gas utility GAIL or any other PSU. “The BP-RIL move to form a joint venture for transporting and marketing natural gas in India is widely expected to spell trouble for GAIL,'' the Home Ministry's note had stated. RIL has run into major problems with regard to production from the prolific KG-D6 gas fields. The output from these fields has fallen from 61.5 million standard cubic metres a day.
