BP is set to become a key player in the Indian oil and gas market after signing a $7.2 billion deal with one of the country's biggest companies.
The British oil giant will acquire a 30 per cent stake in 23 oil and gas blocks operated by Mumbai-based Reliance Industries, the energy business run by Asia's richest man Mukesh Ambani.
The deal also includes the formation of a fifty-fifty joint venture between the two companies for marketing gas in India.
The tie-up comes just a month after BP announced a £10 billion deal with the Russian government to open up unexplored reserves in the Arctic.
The deal is the latest in a series as BP restructures in the wake of the Gulf of Mexico oil disaster and seeks to rebuild confidence in the US.
Its 2010 results earlier this month revealed a $4.9 billion loss after the Deepwater Horizon tragedy.
But the energy giant set out plans to sell US refineries and focus on emerging markets, such as India, as part of its recovery.
The company said Reliance will continue to be the operator under the production-sharing contracts at the oil and gas blocks. The blocks currently produce about 1.8 billion cubic feet of gas per day - more than 30 per cent of India's total consumption.
BP has agreed to pay Reliance future payments based on exploration success and commercial discoveries and said these plus investment costs could value the deal at a potential $20 billion.
BP chief executive Bob Dudley said India is one of the fastest growing economies in the world.
“By allying ourselves with Reliance, we will access the most prolific gas basin in India and secure a place in the fast-growing Indian gas markets, creating a genuinely distinctive BP position.”
BP added that the transaction constitutes one of the largest foreign direct investments into India on record.
Ambani said the partnership combines the skills of both companies and will be focused on finding more hydrocarbons in the deep water blocks of India and “significantly contribute to India's energy security”.
"We are delighted to partner with BP, one of the largest energy majors and one of the finest deep water exploration companies in the world.”
The announcement came as BP said it was pulling up to 40 staff and their families out of Libya, and had suspended the preparations for onshore drilling in the western desert.