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BP and Reliance = $7.2 billion

BP will pay $7.2 billion to Reliance Industries to take 30% stake in 23 oil and gas blocks, and another $1.8 bn based on performance. This is the second BP deal worldwide, after a $8 bn equity swap with Rosneft in Russia. BP will also set up a 50:50 joint venture for marketing LNG.

This is a good deal for RIL. It was getting flak for not being able to pump in more gas or explore more, and it really hasn’t built deepwater capabilities yet. BP can also augment the near-term lack of gas by external supplies and feed into the distribution setup RIL has built which is currently not used much. It’s huge for the gas industry in India if the distribution setup takes off – NG is an amazing fuel and if you fix transportation it can change our energy profile.

RIL went up 2% yesterday to 957. But nothing spectacular in terms of volumes, honestly. 555 crores on an expiry week is par for the course. Let’s see how the markets react today.

  • Shailendra Bisht says:

    >RIL is up 4%.
    Looks like Market has given Thumsup to the deal.
    Does it make sense to go long on reliance now given that it's stock has underperformed for quite sometime?

  • Deepak Shenoy says:

    >Yes, I think so. More volumes today and it looks like there's some strength. Keep a 10% SL though

  • Oracle says:

    >It is something siimilar to 2G Scam. Govt auctions or allots Telecom Spectrun to some firms ( like Swan and Unitech) and then sold them to hefty premium to other parters like Etelisat and Telenor. (Seems Govt approval required for such transaction to happen)
    I think, unless and until, RIL gets slice of BP interms of oilfield or gas-field, not much to gain to India. ( BP's inverstors has something to rejoice as they get BRIC Pie)