Paving the way for grant of formal clearance to the deal by the Petroleum and Natural Gas Ministry, the Union Home Ministry has given `approval’ for the $7.2 billion buyout of 30 per cent stake by Britain-BP in Mukesh Ambani owned Reliance Industries Limited (RILs) oil and gas business.
In a communication to the Petroleum Ministry, the Ministry of Home Affairs has given its security clearance and a no-objection certificate for BP buying a 30 per cent stake in 23 oil and gas blocks of RIL, according to officials in the Petroleum Ministry.
The RIL-BP deal has come at a time when the output from the KG-D6 gas fields has gone down dramatically. The production that should have been around 68 MMSCMD is hovering around 48 MMSCMD. RIL wants to `utilise’ the global experience of BP to resolve sub-surface technical issues at its KG-D6 gas fields.
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With the NOC obtained from the Union Home Ministry, the clearance from the Petroleum Ministry is likely to follow for the transaction. Following this, amendments to the Production Sharing Contracts (PSCs) of the 23 blocks would be effected to induct BP as a partner. However, RIL will retain the opreationship of all the 23 blocks. The $7.2 billion RIL-BP deal has been termed as the biggest foreign direct investment (FDI) into India.
RIL is the operator in all the 23 blocks, while Canadian Niko Resources and UK's Hardy Oil have minority 10 per cent interest in a few. After the deal, RILs holding in the blocks will come down to 60-70 per cent. Nineteen out of 23 blocks lie off the East Coast, while two blocks are onland, in Assam and Gujarat.