Aramco in advance talks to acquire stake in RIL in a multi-billion deal
Reliance announced sale of 20% stake in its oil-to-chemicals business USD 15 billion in 2019 to Saudi Aramco
On 16th August 2021, it was reported that Saudi Aramco, a gobal leader in petroleum industry, is in advance talks to acquire approximately 20% stake in Reliance Industries’ oil refining and chemicals business for about USD 20 billion to USD 25 billion in Aramco’s shares.
Reliance announced sale of 20% stake in its oil-to-chemicals business USD 15 billion in 2019 to Saudi Aramco. However, the deal fall-off as oil prices and demand crashed last year because of the pandemic. Saudi Aramco’s chief executive officer Amin Nasser said the company was still doing due diligence on the deal during Aramco’s earnings briefing earlier in August.
Reliance Chairman Mukesh Ambani said, RIL hopes to formalise its partnership with Aramco this year and its chairman Yasir Al-Rumayyan will join the Indian conglomerate’s board as an independent director, during company’s AGM in late June.
Mr. Ambani said, “Despite several challenges due to Covid-19, we have made substantial progress in the past in our discussions (with Saudi Aramco)... This continued engagement and resolve from both sides, even during this pandemic, is a testimony of strong relationship between Saudi Aramco and Reliance.”
Reliance’ oil-to-chemicals business comprises its twin refineries at Jamnagar, world’s largest refinery, in Gujarat and petrochemical assets. The deal would also ensure a dedicated market for Aramco's crude oil in India as oil-to-chemical business will sign to buy 500,000 barrels of crude oil every day (28% of Jamnagar refinery’ requirement) on a long-term basis from Aramco. Besides, the oil-to-chemical business will be a value-creating proposition for both the giants as it focuses to channel 70% of the refined crude for manufacturing high-value chemical products.
Yasir Al-Rumayyan, Chairman of Saudi Aramco and the Governor of the Public Investment Fund was also appointed as an independent Director of RIL with effect from July 19. he move is believed to have hastened the deal talks. The partnership of RIL and Aramco is expected to improve India-Saudi relations, especially while negotiating the crude price.
Mukesh Ambani said that the appointment of Rumayyan is also the beginning of internationalisation of Reliance and more announcements on international plans of the company would come in times to come.
