Business

BP in $7.2bn oil pact with India's Reliance Industries

Reliance chairman Mukesh Ambani
Image caption Reliance chairman Mukesh Ambani said the deal had huge significance for his country's development

UK oil giant BP and Reliance Industries have announced a "transformational" strategic oil and gas partnership in India.

The companies will form a 50:50 joint venture for sourcing and marketing energy in India.

The deal gives BP a 30% stake in 23 oil and gas blocks owned by its new partner including 19 off India's east coast.

In return, the UK firm will pay $7.2bn (£4.4bn), plus up to a further $1.8bn in future performance-related payments.

Major investment

The deal is expected to result in a total combined investment in India of $20bn, according to the companies' joint statement.

"This is a clear reflection of the way in which believe that the energy industry is developing," said BP's chairman, Carl-Henrik Svanberg.

He said that the company predicted global energy consumption would rise by 40% between now and 2030, with most of the growth coming from emerging markets such as India.

"This has huge significance for India's economic development," said Reliance's Mukesh Ambani, noting that BP's investment would constitute the single largest foreign direct investment in India's history.

He noted BP's strong position in the natural gas business, which is expected to be the main energy source exploited via the partnership.

BP chief executive Bob Dudley noted that the hydrocarbon fields involved are comparable in size to the UK North Sea.

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