THE HIGHLY heralded $ 7.2 billion deal between Mukesh Ambani owned Reliance Industries Limited (RIL) and London based BP p.l.c is set to get the cabinet approval, allowing BP a 30 per cent stake in 23 oil and gas blocks of RIL, including RIL’s gas producing KG D6 block – one of nation’s biggest gas assets - opening the doorway for the largest FDI ever seen in the sector. The deal is equally prolific as it reflects the rising power and potential of private players in a sector that had, so far, largely been a public sector holding.
By employing BP’s technical assistance, RIL will be able to tap the limited reserves off the cost of Andhra Pradesh to their full potential. These reserves carry half the volume of stipulated quantity as established on initial examination, posing a serious challenge to its operator.
RIL-BP deal is representative of a growing private partnership presence in a sector that has always been endorsed by public players, such as ONGC; favored for the most part by the government. Despite the fact the ONCG has been unable to make any significant find in the last three decades; government continues to sanction huge sums of money toward public players who out-bid others largely on the claims of number of wells they are willing to dig, irrespective of a field’s productive capacity. At a time when country faces the brunt of securing energy reserves, the government cannot afford to allocate huge amount of funds to public players that have not been able to produce any significant result, as against private players that have largely been doing well. Taking hint from RIL’s efforts, it is assuring to find private operators take far-reaching measures to ensure the most out of every reserve rather than probe around for acreage to develop.
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