BP grabs a slice of India oil and gas giant at £4.4 billion

The tie-up comes just a month after BP announced a £10 billion deal with the Russian government to open up unexplored reserves in the Arctic.

At its fourth-quarter results this month, the British energy giant set out plans to sell US refineries. Today's announcement marks the latest stage of its focus on emerging regions.

The deal is one of the biggest foreign direct investments made in India, covering 23 oil and gas blocks over 270,000 sq km, which will make the joint venture the largest private-sector owner of exploration assets in the country.

BP will hold a 30% stake in the upstream assets, plus own half of a joint venture between the two firms to source and market gas in India.

The British oil major has agreed to pay Reliance future payments based on exploration success and commercial discoveries, and said these plus investment costs could value the deal at $20 billion. Ambani is a colourful tycoon who lives in a 27-storey house in Mumbai with four helipads. He is best known for his long-running feud with his brother Anil, after the duo fell out after the death of their father, Dhirubhai, in 2002.

Dhirubhai Ambani was a self-made businessman who created the Reliance empire, which includes petrochemicals and telecoms as well as energy, but died without writing a will.

Today BP's chief executive Bob Dudley said he was looking forward to working with Reliance, adding: "India is one of the fastest-growing economies in the world. By allying ourselves with Reliance, we will access the most prolific gas basin in India and secure a place in the fast-growing Indian gas markets, creating a genuinely distinctive BP position."

Mukesh Ambani said: "This partnership combines the skills of both companies and will be focused on finding more hydrocarbons in the deep water blocks of India and significantly contribute to India's energy security." The completion of the deal is still subject to Indian regulatory approvals and other customary conditions, BP said.

BP expects energy consumption in India to rise by more than 4% a year for the next two decades, with demand for gas growing more than 5%.

Last year, it sold its assets in Pakistan as part of the $22 billion asset sales in made to help pay for the Gulf of Mexico oil spill. The firm's shares rose very slightly in response, up 0.15p to 493.15p.

It emerged today that partners in BP's established Russian venture, TNK-BP, have appointed two of the City's leading advisory firms for help ahead of Friday's extraordinary general meeting of TNK-BP.

The meeting is to decide whether to pursue a formal role in the tie-up announced last month between BP and Rosneft. The firms are Perella Weinberg and Macfarlanes.