Reddy said the cabinet has not approved the remaining two blocks in north eastern India’s north for “technical reasons” and did not disclose any details on the plans for those two sites.
The approval for one of the largest investments in India’s oil and gas sector will pave the way for Reliance to benefit from BP’s deepwater exploration expertise, partly in its key gas fields off India’s east coast, where gas output has been slowing for many months.
The two companies signed the deal in February.
“BP is keen to be a long term partner with India in its quest for energy security. We will now work to complete the commercial agreements with Reliance and move forward with this exciting venture,” BP said in a statement.
A Reliance spokesman declined comment.
Reddy said India, which imports more than 80 percent of its crude oil, “needs gas desperately.”
“One hopes that the consortium will do their best to ramp up production,” Reddy told reporters after a cabinet meeting.
In May, India’s upstream regulator said Reliance was producing 48 mscmd (million standard cubic meters per day of gas) from its main D6 block in the KG basin, lower than the 60 mscmd it produced last year, and far off the planned peak capacity of 80 mscmd.
Reliance has been under fire over the past few months from the upstream regulator, investors and analysts due to the slowing gas output, and its shares have been under pressure, down nearly 17 percent compared to the 8.7 percent fall in the main index.
“The market had been expecting the approval. BP’s expertise will certainly help them. It will allow more collaboration,” said Alok Deshpande, oil & gas sector analyst at Mumbai’s Elara Securities.
Reddy declined to comment whether the two companies had been set a timeline to boost production, but said “the deal would involve induction of vast technical expertise in India’s hydrocarbon sector.”
The Indian government last month 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 1.5 percent higher at 873.35 rupees in a firm Mumbai market. The company is expected to report a record quarterly profit when its reports earnings on Monday.
