Reliance Industries’ proposed deal to sell a 20% stake in its oil-to-chemicals (O2C) business to Saudi Aramco for $15bn is facing a delay due to uncertainty caused by the Covid-19 crisis and unforeseen circumstances in the energy market.
The parties had signed a non-binding Letter of Intent (LOI) in August 2019, paving way for what was then thought to be among the largest foreign direct investments in India.
Reliance Industries took up the deal with Saudi Aramco to reduce its debts.
The deal was earlier estimated to be wrapped up by March 2020, subject to regulatory and other customary approvals.
During the annual general meeting of Reliance Industries, the group’s chairman Mukesh Ambani said that the transaction with Saudi Aramco did not move ahead as per the earlier timeline.
Ambani, addressing the group’s shareholders, said: “Nevertheless, we at Reliance value our over two-decade-long relationship with Saudi Aramco and are committed to a long-term partnership. We will approach NCLT with our proposal to spin off our O2C business into a separate subsidiary to facilitate this partnership opportunity.
“We expect to complete this process by early 2021.”
The oil-to-chemicals division of Reliance Industries comprises the group’s petrochemicals, refining, and fuels marketing businesses.
Included in the oil-to-chemicals operations of the Indian conglomerate is the Jamnagar refinery in the state of Gujarat. The refinery, on a long term basis, is set to be supplied 500,000 barrels per day of Arabian crude oil from Saudi Aramco following the completion of the proposed deal.
Reliance Industries and Saudi Aramco have a long-standing oil supply partnership
Both Reliance Industries and Saudi Aramco already have a long-standing crude oil supply deal for more than years. The Saudi Arabian state-owned oil company is said to have supplied more than two billion barrels of crude oil for the Jamnagar refinery.
The Indian refinery is made up of units such as fluidised catalytic cracker (FCC), coker, alkylation, paraxylene, refinery offgas (ROG) cracker, polypropylene, and petcoke gasification plants.
Ambani during the annual general meeting also claimed that other global companies had expressed interests for forging partnerships with Reliance Industries’ petrochemical business.
