This marks the second major deal under BP's new chief executive Bob Dudley, who last month agreed a share swap with Russia's state-controlled Rosneft to jointly explore the Arctic for offshore oil and gas.

BP said on February 21 it would pay Reliance Industries US$7.2 billion and performance payments of up to US$1.8 billion if the tie-up leads to the development of commercial discoveries.

"BP is the best finder of hydrocarbons in deepwater in the world," Mukesh Ambani, Chairman and Managing Director of Reliance Industries, said at a press conference.

BP wants to put last year's Gulf of Mexico oil spill disaster behind it, and said earlier this month it would look for long term growth through a fresh focus on discovering oil and gas via exploration partnerships.

The oil spill prompted a US$30 billion asset disposal program to help cover BP's costs. But Dudley said BP still had plenty of cash to fund the investment in Reliance assets at a price equivalent to US$7.50 per barrel.

BP will take a 30 percent stake in 23 oil and gas blocks and form a 50:50 joint venture for sourcing and marketing gas.

Dudley shrugged off concerns about the gas price and said the deal would help BP gain from rising energy demand in India.

The companies said the future performance payments and the combined investment could amount to US$20 billion in total.