There was one immediate, quasi-tangible benefit for India's Reliance Industries in the wake of Monday's landmark deal with BP: followers could extrapolate the numbers to get a rough valuation for the entire Reliance exploration and production business.

With BP paying $7.2bn up front, and possibly a further $1.8bn depending on commercial success, for a 30 per cent stake in 23 oil and gas fields, Pradeep Mirchandani at JP Morgan reckons this values the Reliance E&P division at up to a cool $30bn.

In a note to clients he considered some further benefits:

RIL is a relatively young player in E&P, and through this deal would be able to leverage BP's expertise in deepwater exploration and production. BP's involvement will also validate development spending and internationalize the gas pricing issue.

Gas prices are an important issue here, not least because they are controlled in India. Indeed, you can look at this whole deal the other way round: rather than placing an impressive 'see-thru' valuation on Reliance's assets, it may simply be that BP has over-paid.

David Cline at RBS seems to think so:

RBS' analyst covering Reliance Industries values the stakes acquired at US$5.7bn, based on an assumed domestic gas price in India of US$5.5/mmBtu from 2015 (domestic gas prices are currently capped at cUS$4.2/mmBtu versus a prevailing NBP price of US$8.6/mmBtu). This is US$1.5bn below the price being paid by BP (excluding performance-related fees), suggesting that BP is paying an acquisition premium, as one might expect, given that Reliance Industries is not a distressed seller. Possibly, BP is assuming a higher gas price over time.

The idea of building exposure to fast-growing economies like India is evidently sensible, at least in principle. However, we find it difficult to get excited about this deal at this time, given that the price paid appears full. Whether BP can extract additional value through new discoveries and higher gas price realisations is likely to become evident only over an extended period. Also, the deal could be seen as somewhat contrary to the idea that BP is in the process of revealing hidden value through its disposal programme, which is an attraction of the shares for some investors.

Time, then will tell. But Ambani is a powerful figure in Indian business society, while BP is an effective and experienced international lobbyist. Perhaps there are other synergies to consider here...

See also:
BP in $7.2bn deal with India's Reliance - FT
BP moves into India with Reliance - beyondbrics