BP has signed one of India’s biggest Foreign Direct Investment (FDI) deal with petroleum giant Reliance Industries Limited for an oil and gas venture and committing to invest $7.2 billion (£4.4 billion) in the Indian company.
BP will form a 50/50 joint venture with Reliance Industries to source and market oil and gas in the country and will also get a 30 percent stake in 23 oil and gas blocks, the companies disclosed.
“This partnership meets BP’s strategy of forming alliances with strong national partners, taking material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets”, said BP Chairman Carl-Henric Svanberg.
Under the deal, BP will pay $7.2 billion upfront and $1.8 billion performance fee if future explorations lead to successful commercial oil and gas discoveries.
“This partnership combines the skills of both companies and will be focused on finding more hydrocarbons in the deep water blocks of India and significantly contribute to India’s energy security”, said Mukesh Ambani, Chairman and Managing Director of Reliance Industries Limited.
The combined investments by the two companies along with future performance payments can amount to $20 billion in total, the companies disclosed.
The latest investment shows the country’s potential in oil and gas reserves, analysts point out. BP has already a presence in India through its lubricant brand Castrol – a leading brand in car engine oils and multigrade engine oils. It is also engaged in deepwater exploration with Reliance since 2008.