Reliance Industries and the 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 gasfield development cost.

Sources 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.

Subsequent to this, Reliance’s stake in KG-D6 has gone up to 66.67 per cent from the 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 the KG-D6 block, slapped a default notice on Niko soon after, sources said.

Under the terms of the joint operating agreement (JOA) among 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).

In addition, if the defaulting party does not cure a default within 60 days of the default notice, the non-defaulting parties have the option to require the defaulting party to withdraw from the KG-D6 PSC and JOA.

Niko had previously withdrawn from the eastern offshore NEC-25 block due to cash crunch. Its 10 per cent interest was assigned to Reliance and BP. Subsequent to that, Reliance now holds 66.6 per cent interest in NEC-25 and BP the remaining 33.37 per cent.

Reliance and BP are investing $5 billion to bring to production three sets of new discoveries in the KG-D6 block.