MUMBA (AFP) ― BP’s multi-billion-dollar tie-up with Reliance will accelerate fuel-hungry India’s exploration for energy and hand the Indian giant the skills to develop hard-to-exploit reserves, analysts say.

The British energy group on Monday agreed to pay $7.2 billion for a 30-percent stake in Reliance’s 23 largely unexplored deepwater oil and gas fields off the coast of India, which cover an area equivalent to the North Sea.

The tie-up with embattled BP, which this month reported its first annual loss in almost two decades as a result of last year’s Gulf of Mexico oil spill, is a perfect match, analysts said.

“Reliance is a young player while BP has the best deepwater exploration skills,” said Gaurav Dua, head of research with Mumbai-based financial services outfit Sharekhan.

Reliance chairman Mukesh Ambani said the agreement ― the biggest foreign direct investment in the Indian energy sector ― marked the start of a new chapter in India’s quest to meet its energy security needs.

BP’s move comes after it joined forces with Russia’s Rosneft last month in a deal to explore for oil in the Arctic region, as it seeks to shift its focus away from the U.S.

India imports about 80 percent of its crude oil and has been frantically trying to find new fuel sources, as the economy grows and raises standards of living and the expectations of the country’s 1.2 billion people.

According to forecasts from the International Energy Agency, demand for gas in India is expected to triple by 2030 ― the fastest growth rate in the world.

“This collaboration will lead to accelerated natural gas production, higher discoveries and an increase in gas recovery rates,” Niraj Mansingka of Edelweiss Securities said.

Investor confidence in Reliance Industries ― India’s largest private-sector firm ― has been boosted by the deal, analysts said.

Reliance shares jumped about three percent on Tuesday on Mumbai’s 30-share Sensex index after the announcement of the deal, which must still be approved by the government.

“In sentiment terms, the deal is big,” Pramod Gubbi, vice president for equity sales at Ambit Capital, told AFP.

“This is a huge sentiment booster for Reliance and the country, demonstrating that its oil blocks have strong credibility,” agreed Sonam Udasi, head of research with Mumbai-based IDBI Capital.

The BP cash will help Reliance build its war-chest for further expansion, Udasi told AFP.

BP already runs a joint venture with Reliance on one offshore field in India, controls leading lubricants firm Castrol India and has a partnership to make solar panels with the Tata conglomerate.

Industry observers said the deal would also help Reliance, which has strong cash reserves of $7.1 billion, move closer to becoming debt-free.

But Standard Chartered bank analyst Rahul Singh said that although the deal gave new value to Reliance’s oil and gas assets, it was still too early to say whether BP had paid the right price.

“It is a difficult one to conclude at this point in time whether, eventually, two to four years out, who the eventual gainer is,” Singh told CNBC TV 18.