LONDON, Feb 21: British energy giant BP and India’s Reliance Industries announced on Monday a massive investment deal which could be worth up to $20 billion with later investment in key Indian oil and gas assets.

BP said it will pay $7.2 billion (5.3 billion euros) to Mumbai-based Reliance Industries for a 30 per cent stake in 23 Indian oil and gas blocks, announcing another major foreign venture as it seeks to put last year’s Gulf of Mexico oil spill disaster behind it.

Earlier this year, it joined forces with Russia’s Rosneft in what could be another transforming deal to explore for oil in the Artic region.

“BP will pay Reliance Industries Limited an aggregate consideration of $7.2 billion, and completion adjustments, for the interests to be acquired in the 23 production sharing contracts,” the tow firms said in a joint statement.

“Future performance payments of up to $1.8 billion could be paid based on exploration success that results in development of commercial discoveries.

These payments and combined investment could amount to $20 billion.” Mukesh Ambani, chairman and managing director of Reliance Industries Limited, and Robert Dudley, BP chief executive, signed the deal in London on Monday.

“The partnership will combine BP’s world-class deepwater exploration and development capabilities with Reliance’s project management and operations expertise,” the two groups added.

Crisis-hit BP reported its first annual loss in almost two decades earlier this month, as a result of the oil spill catastrophe, and outlined fresh plans to shift its focus away from the United States.

BP suffered a loss of $4.9 billion last year, the first shortfall since 1992 and compared with a massive profit of $13.96 billion in 2009. The group has also announced plans to halve its US refining business.

Analysts in India hailed the accord as a huge boost for Reliance and the country which has been trying to boost energy production to meet the needs of its booming economy.

“This is a huge sentiment booster for Reliance and the country, demonstrating that its oil blocks have strong credibility,” said Sonam Udasi, head of research with Mumbai-based IDBI Capital.

The BP cash will also help Reliance build its war-chest for further expansion, Udasi told AFP.

Reliance has generated $2 billion through the sale of shares since September 2009 and is expected to keep raising cash to boost its reserves and ability to make acquisitions.

Reliance operates the world’s largest oil-processing complex in Jamnagar, western India, where two adjacent refineries have a combined capacity to process 1.24 million barrels of oil a day.

Apart from the oil and gas blocks, BP and Reliance will also set up a 50-50 joint venture for the sourcing and marketing of gas in India.

Mukesh Ambani said the accord will “significantly contribute to India’s energy security.” “India is one of the fastest growing economies in the world,” Dudley said. The statement described the deal as “one of the largest foreign direct investments into India,” covering some 270,000 square km.

The production sharing contracts currently produce more than 30 per cent of India’s total gas consumption and more than 40 per cent of its total production.

Shell to sell African assets for $1bn Anglo-Dutch energy giant Shell said on Monday it agreed to sell most of its African downstream activities to Swiss group Vitol and Africa-based Helios Investment Partners for $1 billion (740 million euros).“Shell today announced it has agreed to divest the majority of its shareholding in most of its downstream businesses in Africa to Vitol and Helios Investment Partners for a total consideration of some $1 billion,” it said.

The energy major, which is seeking to sell non-core assets, added that it will create two new joint ventures under the proposed deal.

The first venture will own and operate Shell’s existing oil products, distribution and retailing businesses in 14 African countries, including Ivory Coast, Egypt, Morocco, Kenya, Uganda and Madagascar.

Shell will sell an 80 per cent stake in the fuels and lubricants assets to oil trading giant Vitol and Africa-focused private investment firm Helios. The Anglo-Dutch firm will retain a 20 per cent holding.—AFP