RIL – BP deal gets the green flag from Finance ministry

Mukesh Ambani led Reliance Industries Limited (RIL), India’s largest private sector conglomerate, has been grated sanction from the finance ministry for its much acclaimed RIL-BP Plc deal. The RIL-BP deal, signed earlier this February, will see BP stake a 30 per cent share in Reliance’s 23 oil and gas exploration blocks, including its most prolific block off the cost of Andhra Pradesh, the Krishna – Godavari (KG D6) block.

Reliance Industries officials had sighted a formal approval from the Cabinet Committee on Economic Affairs (CCEA) on the stakes of the deal, given its magnitude and the large investment amount involved, earlier this February. According to constitutional amendment, government consent is considered as ‘deemed’ in the event it has not provided consent in the stipulated time period of 120 days from the day of request. But both RIL and oil ministry agreed to getting a formal sanction from the cabinet as Reliance Industries sought to abide by the New Exploration Licensing Policy (Nelp) under the PSC.

The finance ministry, on Wednesday, notified that the deal does not require CCEA nod and approving the $ 7.2 billion deal, the finance ministry and the oil ministry clearly supported BP’s deal to buy stakes in RIL.

The RIL-BP deal with see both energy majors come together in a 50:50 joint venture, under which sourcing and marketing of gas in India will be undertaken. The JV will also see establishment of infrastructure for receiving, transporting and marketing of natural gas in India. This deal will allow Mukesh Ambani led RIL to implement BP’s superior technical assistance in exploring deep sea oil and gas blocks, while BP will mark its entry in India’s exploration and production business. This will give the London based energy giant a chance to tap into Asia’s second biggest energy consuming nation. Consumption of energy products in India has risen by 190% over the past 20 years and is set for further increase by 115% over the next 20 years, at a rate of over 4% per annum, as per BP’s Energy Outlook 2030.

Advertisements

Tags: , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: