Marking its largest investment in India yet, BP (BP) will acquire for $7.2 billion a 30% stake in several contracts operated by Reliance Industries in the region, an effort to capitalize on the country's rapidly growing energy demand.

Under the terms of the deal, BP will take a position in 23 oil and gas production sharing contracts that Reliance operates in India. The oil and gas blocks cover roughly 270,000 square kilometers, making the partnership India’s largest private sector holder of exploration acreage.

Reliance chairman Mukesh Ambani said the partnership will focus on finding more hydrocarbons in the deep water blocks of India, with the goal being to “significantly contribute to India’s energy security.”

The venture, according to BP chairman Carl-Henric Svanberg, increases the company’s exposure to growing energy markets, while at the same time providing the oil and gas company with material positions in significant hydrocarbon basins.

In addition to the aggregate fee, BP will be responsible for future performance payments of up to $1.8 billion, which will reflect certain milestones based on the success of exploration and development of commercial discoveries. The payments, along with combined investment, could amount to $20 billion.

The contracts include the producing KG D6 block and the formation of a 50:50 joint venture between the two for the sourcing and marketing of gas in India.

Reliance will continue to be the operator under the production sharing contracts whose blocks lie in water depths from 400 to over 3,000 meters. Those blocks produce about 1.8 billion cubic feet of gas per day, over 30% of India’s total consumption, and more than 40% of its total production.

This isn’t the first time the two companies have teamed. BP has been working with Mumbai's Reliance in a 50:50 joint venture since December 2009 on a deepwater block in the Krishna Godavari basin on the east coast of India.

BP, which is still recovering from its Gulf of Mexico oil spill last year that cost the company billions of dollars, has noted India’s attractiveness given its rapidly increasing energy consumption. According to BP’s Energy Outlook 2030, energy consumption in India has grown by 190% over the past 20 years and is likely to grow by 115% over the next 20 years.

The latest transaction is subject to Indian regulatory approvals and other customary closing conditions.

Follow Jennifer Booton on Twitter at @Jbooton