Introduction Fastest growing industry Foundation for manufacturing industries Oligopolistic with four main playersRIL,GAIL,IPCL,HPL

Current Scenario Fifth-largest energy consumer Buoyant economic growth 100 per cent FDI allowed in private sector refining Future Growth East and SE Asia becoming processing hubs for end products Natural gas sector expected to grow at 19.5% till 2017 Projected consumption growth to 473 MSCMD* in 2017

Growth drivers Government infrastructure program worth over 500 billion INR 100% FDI SEZs and PCPIRs High domestic demand

Milestones 1889-First Commercial Oil discovery 1954-Oil made a core sector 1991-Liberalization of petrol &export policy 1999- NELP introduced

Current Trends Foreign investments at an all-time high Government support High revenue generation

Introduction British MNC, HQ at London Vertically integrated Operates in over 80 countries Produces 3.4 million barrels of oil equivalent/day Weaknesses

Strengths Worldwide network and subsidiaries Listed in the LSE and FTSE 100 indices Strong brand management. Beyond Petroleum slogan.

Baku-Tbilisi-Ceyhan pipeline History of controversies. Recent Deep water Horizon Oil Spill

Current Position Third-largest energy company Fourth-largest company in the world by 2011 revenues One of six supermajors in the industry

Introduction Subsidiary of Reliance Industries Limited Based in Ahmedabad Strategic alliance with Chevron holdings

Strengths Strong brand name One of the few Indian companies to be featured in Forbes Employs over 25,000 people
Current position Interests in the downstream oil business. Benefits from a strategic alliance with Chevron Holdings Two more refineries and 800 service stations in Australia.

Weaknesses Long term debt Legal issues Krishna Godavari D6 gas controversy Accusations of being favoured by the government

Valuation Details: BP bought 30% stake in most of Reliance Industries' (RIL), including the KGD6 gas fields, for $7.2 billion. Stake in 23 oil fields RIL gets access to a further $1.8 billion if further hydrocarbons are discovered JV for sourcing and marketing of gas, developing infrastructure Management Changes: No changes at the top level, though it helped Bob Dudley, BPs CEO benefitted greatly from it after previous failures such as Deepwater Horizon oil spill.

Timeline of Deal: December 2008 : BP starts working with Reliance on the D-17 deep-water block. Has 50% stake. Subsequent meetings between Mukesh Ambani and Bob Dudley. 2010- The deal is signed. July 22,2011- Deal formally approved by Indian Government Regulatory Issues: Approved by the Government of Indias home, finance and petroleum ministries, after five months of delay, on July 22, 2011. Funding : BP paid $2bn dollars initially. Divested a portion of its assets to Reliance Any rival bidders ?: No.

 Financial 30% stake in gas blocks held by Reliance Industries for 7.2 billion USD. Product Both the companies will develop and extract gas from gas fields in

India, jointly Technical Combines BPs deep-water exploration capabilities with Reliances project management and operations expertise Geographical Helped BP enter India Gave BP legal role in the management of Indias largest gas block

Positives: BPs expertise, credibility and technical abilities will boost Reliances output Enhances the valuation of existing assets. BP gets to enter exploration and production Negatives: For Reliance, share of 30% including 23 blocks acts as a hurdle as some of them are not ready to progress forward at the moment. Includes Reliances greatest asset in the form of the D6 block.

Sell Side: Goldman Sachs has been advising Reliance in its deal making for the 23 oil and gas blocks when it kick-started in late 2007. Buy Side: Morgan Stanley's London team advised BP on the deal.

 Stock price went up to a high of Rs.1065.55 during the week

following the deal(in Feb 2011). Mixed opinions about the deal, with a lot of negative opinion from experts. General Opinion: Buy when it fell into the late Rs.900s. Mostly, it has come down markedly, reaching a low of Rs.673.50 last month. Largely due to project delays in the recent past and negative forecast on the KG-D6 front.

 The deal arose out of both companies distress BP due to Deep-water Horizon, and Reliances inability to arrest falling production

levels.
For British Petroleum:
Shifting focus from North Sea oil fields to SE Asia Experience in the field is expected to ramp up production in the KG D9 and D6

fields.
For Reliance:
Excellent trade-off Divesting 30 percent in exchange for expertise Took place at a time when British companies were not having a good time in India-

Cairn and Vodafone

Instant shift in fortunes cannot be expected due to historic negative cash flows

Conclusion:
The deal is a trendsetter which could attract more foreign players into the Indian

market.