Home ministry clears RIL-BP deal

The Home Ministry has given unconditional approval to RelianceIndustries for the sale of a 30 per cent stake in 23 oil and gas properties,including the Mukesh Ambani-led firm's showpiece KG-D6 block, to UK's BP Plcfor $7.2 billion.

The HomeMinistry, which was asked by the Petroleum Ministry to give security clearanceto India'sbiggest foreign direct investment, gave its no-objection certificate (NOC) on June1, a top oil ministry official said.

While givingthe NOC, the Home Ministry asked if Reliance could not have offered the staketo state-owned gas utility GAIL India or any other PSU.

Reliancebrought in BP to leverage Europe's second biggest firm's expertise in producingoil and gas from deepsea areas.

Reliance hasbeen facing sub-surface technical problems at its eastern offshore KG-D6fields, where production has fallen from 61.5 million standard cubic metres perday to about 48 mmscmd, instead of rising to the planned 69 mmscmd.

Reliance hopesBP will help fix the reservoir issues and rapidly raise output to the peak of80 mmscmd.

The officialsaid no Indian company - private or public sector - has deep-sea expertise anda gas marketing company like GAIL could not have added any value to KG-D6 orother blocks of Reliance.

Oil andNatural Gas Corp, the nation's largest state explorer, is in fact struggling toput together a viable development plan for discoveries it has made in a blockadjacent to KG-D6 in the Krishna-Godavari basin. ONGC itself has been seekingpartners for that block and had shortlisted BP as a potential ally.

The officialsaid the Home Ministry has also asked if oil and gas can be exported."That is ridiculous to even think.

ProductionSharing Contract (PSC) bars export of oil outside India and the Supreme Courthas upheld the government's absolute powers to decide users of natural gas. Sowhile Indiais energy deficit, no government can even think of exporting gas."

"There isno way that BP can take oil and gas produced from Reliance blocks to the UK," headded.