New Delhi: The Cabinet is likely to consider the approval for a $7.2 billion deal between Reliance Industries and BP next week after the oil ministry recommended its approval, an oil ministry source said on Wednesday.
Reliance agreed in February to sell a stake in 23 of its oil and gas blocks, including some in the KG basin, to BP, and is expected to benefit from BP's deepwater exploration expertise.
"We have moved the cabinet note and it will be considered most likely next week. Ministry has recommended for approval of the deal," the source, who declined to be identified, said.
Reliance, with interests in refining, petrochemicals, oil and gas exploration and retail, has been under fire over the past few months as investors and analysts have focused on slowing output from its gas blocks off India's east coast.
In May, India's upstream regulator said Reliance was producing 48 mscmd (million standard cubic metres per day of gas) from its key D6 block in the Krishna-Godavari basin, lower than the 60 mscmd it produced last year, and far off the planned peak capacity of 80 mscmd.
"Technically, the ministry has competence to do so (decide on the deal) but since it is a big ticket investment the ministry decided to recommend it to cabinet," the source said.
The government last week gave conditional approval to Vedanta Resources' $6 billion deal to buy a stake in British oil explorer Cairn Energy's Indian business, after a delay of more than 10 months.
Ahead of the news, shares in Reliance, which is India's top listed firm, closed 0.8 percent higher in a flat Mumbai market. The stock has slipped nearly a fifth so far in 2011, compared to an 8.7 percent fall in the main stock index.
Updated Date: Jul 06, 2011 19:54:37 IST