Reliance-Aramco deal on track
20 July 2020
The blockbuster deal involving Aramco picking up a minority stake in the refinery business of India's Reliance Industries (RIL), is on track as the two sides remain committed to a long term partnership, RIL chairman Mukesh Ambani said.
Speaking at the company's first virtual annual general meeting, Ambani said that due to unforeseen circumstances in the energy market, the deal (with Aramco) has not progressed as per the original timeline. In the meanwhile, the company's equity requirements have already been met.
"Nevertheless, we at Reliance value our over two-decade-long relationship with Saudi Aramco and are committed to a long-term partnership," he said.
The RIL and Aramco deal has been in the works for some time and doubts were raised on its early completion due to Covid-19 outbreak and lockdowns.
The deal between Reliance and Aramco involves the Indian entity offering at least a 20% stake in a special purpose vehicle covering refining, petrochemicals, and marketing. RIL board has already approved hiving-off its USD 75bn O2C business into a separate entity. This is subject to the approval of the National Company Law Tribunal (NCLT).
Ambani announced that the company will spin off its oil-to-chemical business into a separate subsidiary by early 2021 after regulatory approvals, and detailed plans of also moving into green energy space.
RIL is looking for investment to pare debt and focus on the expansion of its refining business. Besides, the investment will also give RIL assured supply of crude oil to its refineries. Aramco fits the bill as the company itself had indicated its desire to expand beyond Saudi Arabia and in particular invest in oil and gas space in India.