Reliance Industries and UK’s BP Plc have taken over the 10 per cent shareholding of their partner Niko Resources in the eastern offshore KG-D6 block after the Canadian firm defaulted on paying for its share of gas field development cost.

Sources with knowledge of the development said the oil minister has given ‘unconditional’ nod to Reliance and BP for taking over 10 per cent interest of Niko in KG-DWN-98/3 or KG-D6 block in the Bay of Bengal.

Reliance and BP split Niko’s share in proportion to their existing shareholding in the block.

Subsequently, Reliance’s stake in KG-D6 has gone up to 66.67 per cent from previous 60 per cent and that of BP to 33.33 per cent from 30 per cent, the sources said.

E-mails sent to Reliance and BP for comments remained unanswered.

Niko, which defaulted on payment of loans to its lenders, has been unsuccessful in seeking a possible buyer for its 10 per cent stake in Bay of Bengal block KG-D6 or securing financing for its share of the $5 billion R-Cluster, Satellite Cluster and MJ development projects in the block. This led to the company defaulting in making payments for its share of development cost in early October 2018.

Reliance, being the operator of KG-D6 block, slapped a default notice on Niko soon after, sources said.

Under the terms of the joint operating agreement (JOA) between the participating interest holders in the KG-D6 production sharing contract (PSC), during the continuance of a default, the defaulting party shall not have a right to its share of revenue (which shall vest in and be the property of the non-defaulting parties who have paid to cover the amount in default).

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