RIL, BP get govt nod to buy out Niko in gas block

NEW DELHI: The government has cleared the proposal by Reliance Industries (RIL) and its partner, UK major BP, to buy out independent Canadian explorer Niko Resources from a gas discovery in the Bay of Bengal.

Cash-strapped Niko had in in 2015 decided to relinquish its 10% stake in the NEC-25 gas block in favour of its partners. Reliance is the operator of the block with 60% interest, while BP has the remaining 30%.

The block is estimated to hold recoverable reserves of over 1 trillion cubic feet. The partners will split the stake between themselves in proportion to their equity. Niko has been facing a cash crunch and had put up for sale its stake in RIL'sKG-D6 oil and gas block without success. Last year, RIL had stated that the block oversight panel has reviewed the declaration of commerciality of gas find D-32 in the block.

The panel is headed by upstream regulator, the Directorate General of Hydrocarbons (DGH), which had previously refused to give formal recognition to the D-32 and D-40 discoveries in the block due to absence of mandatory tests to check viability.

The DGH had also previously not approved a $3.5 billion plan for developing gas discoveries in block NEC-25 in the absence of its prescribed Drill Stem Test (DST) to confirm two of the finds. Thereafter, the partners decided to go for the DST test on one of the finds and relinquish or give up the other. The presentation did not say if the partners have submitted a revised field development plan (FDP).

RIL in March 2013 had submitted a $3.5-billion integrated field development plan for producing 10 million cubic metres per day of gas from the discoveries D- 32, D-40, D-9 and D-10 in NEC-25 by mid-2019.

Reliance Industries Limited (RIL)