Britain's BP will acquire a major stake worth up $7.2 billion in two dozen of oil and gas blocks owned by India’s Reliance Industries after Indian government gave its green signal for the deal.

Under the agreement, announced in February, BP will buy a 30 per cent stake in 23 of Reliance's oil and gas blocks, including India's largest gas field KG-D6, said a report in our sister publication, the Gulf Daily News.

It also envisages a performance payment of up to $1.8 billion if the tie-up leads to the development of commercial discoveries. The oil ministry had already given its support to the partnership, one of the largest foreign investments in India.

'Since this deal was huge, we thought it was better to get it approved by the Cabinet Committee on Economic Affairs,' Petroleum Minister Jaipal Reddy said.

Reliance, controlled by billionaire Mukesh Ambani, hopes BP's deepwater drilling expertise will increase output from the KG-D6 field, which has dropped to about 50 million cu m a day from 60 million in June last year.

BP, meanwhile, will benefit from access to new hydrocarbon resources and markets.

Such access has become especially important given the political upheaval in the Middle East and North Africa, and a moratorium imposed by Washington on drilling in the Gulf of Mexico in the wake of last year's massive oil spill.

Reliance is the operator in all the 23 blocks while Canadian Niko Resources and Britain's Hardy Oil have a minority 10 per cent interest in a few.

Nineteen of the blocks lie off India's east coast, while the others are inland in the northeastern state of Assam and the western state of Gujarat. Reliance and BP will also form a 50:50 joint venture for the sourcing and marketing of gas in India.

BP welcomed the news and awaited 'formal communication'.

'BP is keen to be a long-term partner with India in its quest for energy security,' it said. 'We will now work to complete the commercial agreements with Reliance and move forward with this exciting venture.'

BP already operates oil and gas blocks in India and has a huge lubricant business, besides a solar power venture with the giant Tata group. – TradeArabia News Service