BP inks $7 billion deal with Mukesh Ambani’s Reliance Industries

BP's $7.2 billion purchase of a 30% stake in Mukesh Ambani-owned Reliance Industries' oil and gas fields in the Krishna-Godavari basin could well reverse the plunge in FDI that India has witnessed this year, reports the Times of India.

The deal is subject to regulatory approval. But it not only might be the largest one-off FDI India sees for the next few years, the paper says. It might also result in investments equal to nearly half the inflows seen during April-December 2010. According to these numbers, FDI fell 23% to $16 billion, compared to nearly $21 billion during the first nine months of the last financial year.

Meanwhile, Ambani may use the infusion of cash to snap up more assets abroad, according to Bloomberg. The financial news service said the deal doubles Reliance Industries' cash to $14 billion, and noted that Reliance has in the past expressed interest in fields in the Gulf of Mexico and Brazil to hedge the risk of investing in India.

For BP, the deal — which may rise to as much as $20 billion in value when success payments and spending on infrastructure are added — adds India as the missing piece in the company's BRIC strategy, says The Guardian. Calling the deal "more straightforward" than BP's deal with Russia's Rosneft, which is based on Arctic wells that won't pay off for years, the paper nevertheless cautions that "BP's returns on the $20bn investment are tricky to estimate" and that BP may be "overpaying for growth and diversification."