New Delhi: Canada’s Niko Resources and Hardy Oil and Gas have given no-objection to their partner Reliance Industries for selling 30% stake in oil and gas blocks like eastern offshore KG-D6 to London-based BP Plc.
Reliance is selling 23 oil and gas blocks which, along with partners like Niko and Hardy, it had won under various rounds of New Exploration Licensing Policy (NELP) since 1999.
The company on 25 February made separate applications for the transfer of 30% stake in these 23 blocks to the oil sector regulator Directorate General of Hydrocarbons (DGH), an official said.
The applications, copy of which was also marked to the oil ministry, were accompanied by a No-Objection Certificate (NOC) from Niko and Hardy, he said.
NELP allows firms to sell or farm-out participating interest (or stakes), subject to ‘no-objection’ from consortium partners.
Niko has 10-15% stake in three gas discovery blocks of Reliance, including the prolific KG-D6, while Hardy holds 10% each in Krishna Godavari basin D9 and D3 blocks.
By virtue of these stakes, both Niko and Hardy have pre- emption rights.
So, the applications that Reliance made for transferring its stake to BP were accompanied by a lot of documents, primary among them being the NOCs of its consortium partners, the official said.
DGH will examine the documents and the applications and if they are found in order, it will forward an in-principal approval to the petroleum ministry.
The official said that once the ministry clears the applications, the file will go back to DGH.
Then, DGH will amend the Production Sharing Contract and submit it to the ministry and only after upon its approval will the deal be said to have received the government nod.
The entire process may take at least 2-3 months, the official said.
BP, Europe’s second biggest oil company had on 21 February agreed to a $7.2 billion deal for buying 30% stake in 23 out of 29 exploration blocks held by Reliance..
BP also agreed to a performance payment of up to $1.8 billion if the tie-up leads to the development of commercial discoveries.
Besides the NOCs, Reliance has also submitted resolution of operating committee (OC) of the blocks, allowing entry of BP to the DGH, the official said.
The company has also submitted audited financial statements/annual report for the preceding three years, copy of the deal, copy of its board resolution to sell stake to BP and a draft amendment to the Production Sharing Contract (PSC) reflecting new shareholding.
The official said BP has submitted 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% participating interest in the 23 blocks. But this will be subject to NOC from its partner,” the official said.
Reliance has said both its partners Niko and Hardy have right to raise their stake by 30% of their current holding.
Niko holds 10% 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% in Mahanadi basin block MN-D4.
In KG-D6 and NEC-25, Niko can increase holdings to 13% (10% plus 30% of 10%). In MN-D4, Niko can raise its stake to 19.5% (15% plus 30% of 15%).
Hardy has 10% interest each in D3 and D9 and so it can raise its stake to 13%.
Both Niko and Hardy have so far not stated if they will exercise their rights.