RIL seeks OilMin nod for stake sale in 23 blocks

"We seem to have received the applications today," Oil Minister S Jaipal Reddy said. "We will consider it on merit." The Europe's second biggest oil company had on February 21 agreed to pay USD 7.2 billion for buying 30 per cent stake in 23 out of 29 exploration blocks held by Reliance.

"It is a mega deal. It is a big deal. We will have to look at application and decide on merit," Reddy said. Reliance sent individual application for all the 23 blocks to the oil regulator Directorate General of Hydrocarbons and also marked a copy to the oil ministry.

It is selling 23 oil and gas block it had won under various rounds of New Exploration Licensing Policy (NELP) rounds since 1999. NELP allows firms to sell or farm-out participating interest (or stakes) subject to NOC from consortium partner.

Canada's Niko Resources has 10-15 per cent in three gas discovery blocks of Reliance including the prolific KG-D6 while Hardy Oil and Gas has 10 per cent stake each in Krishna Godavari basin D9 and D3 blocks.

By virtue of these stakes both Niko and Hardy have pre- emption rights and so the application that Reliance made for transferring its stake to BP would have to be accompanied by a lot of documents, primary among them being the NOC of its consortium partners, he said. DGH after examining the application will forward it to the oil ministry for an in-principal approval. The ministry after going through the application would approve and the file will go back to DGH.

DGH then will make an Amendment to the Production Sharing Contract which will be submitted to the ministry and upon its approval will the deal be said to have received government nod. The entire process may take at least 2-3 months, he said.

Besides NOC, Reliance will have to submit resolution of operating committee of the blocks allowing entry of BP to the DGH, an official said. Also, audited financial statements/annual report for preceding three years, copy of deal, copy of its board resolution to sell stake to BP and a draft amendment to the Production Sharing Contract (PSC) reflecting new shareholding will have to be submitted.

Besides, BP would have to submit a brief on its technical capability, copy of signed annual audited financial statements/annual reports for preceding three years, board resolution, an undertaking, bank guarantee and family tree of the parent company.

"The policy allows Reliance to sell part of its 85-100 per cent participating interest in the 23 blocks. But this will be subject to NOC from its partner," the official said. Reliance has said both its partner Niko and Hardy have right to raise their stake by 30 per cent of their current holding.

Niko holds 10 per cent stake in the Reliance's prolific eastern offshore KG-D6 block and gas discovery block of NEC-25 off the Orissa coast. It also holds 15 per cent in Mahanadi basin block MN-D4.

In KG-D6 and NEC-25, Niko can increase their holding to 13 per cent (10 per cent plus 30 per cent of 10 per cent). In MN-D4, Niko can raise its stake to 19.5 per cent (15 per cent plus 30 per cent of 15 per cent).

Hardy has 10 per cent interest each in D3 and D9 and so it can raise its stake to 13 per cent. Both Niko and Hardy have so far not stated if they will exercise their right.