Page 4 - DMEA Week 47 2021

DMEA COMMENTARY DMEA

Aramco pulls out of one Indian

deal, announces another

Reliance and Aramco have called off their planned $15bn downstream tie-up while
the Saudi firm has already started talks with ONGC for major crude offtake deals.

MIDDLE EAST SAUDI Aramco and India’s Reliance Industries Ambani Green Energy Giga Complex alongside
Ltd this week called off a major downstream its world-leading downstream facility at Jamna-
deal following years of talks, but the Saudi firm gar. The new facility will include units for fuel
WHAT: wasted no time in opening discussions with cells, integrated solar photovoltaic modules,
The deal would have another Indian state giant for crude offtake. batteries and electrolysers for producing green
added Reliance’s massive With the multi-billion dollar Reliance deal hydrogen.
Jamnagar refining now appearing to have been scrapped altogether, The solar module facility will have an initial
complex to Aramco’s Aramco and Oil and Natural Gas Corp. (ONGC) capacity of 4 GW and the company has plans to
gross refining capacity, signed a memorandum of understanding (MoU) expand this to 10 GW.
achieving one of its key to explore potential supply deals. Reliance O2C owns and operates a refining
long-term downstream slate of 1.82mn bpd comprised of the world’s
goals. RIL breakdown largest refining complex at Jamnagar and
Reliance said it and Aramco had come to a another sizeable facility located within the Jam-
WHY: mutual decision to scrap a planned deal for the nagar Special Economic Zone. It also has 38.4mn
Talks broke down latter to acquire a 20% stake in the former’s spun- tpy of petrochemicals capacity, which processes
amid talk of Reliance’s off oil-to-chemicals (O2C) division. around 60% of its refining output.
strategic refocus on clean Noting that the company’s strategic focus was The division also comprises a bulk wholesale
and renewable energies, shifting towards renewables, Reliance added that marketing business, a fuel retail arm which com-
though the parties are it would also no longer spin off the O2C division. prises a 51% stake in a JV with BP and oil trading
understood to remain “Due to evolving nature of Reliance’s busi- subsidiaries in Singapore and the UK.
keen to collaborate ness portfolio, Reliance and Saudi Aramco Talks between Aramco and Reliance had
despite failure to agree have mutually determined that it would be been running since August 2019, when Ambani
on a deal. beneficial for both parties to re-evaluate the announced that the two companies had “agreed
proposed investment in O2C business in light to form a long-term partnership in our oils to
WHAT NEXT: of the changed context,” it said. Aramco is yet chemicals division […] This signifies the perfect
An MoU with ONGC to comment on the deal, which was seen adding synergy between the world’s largest oil producer
appears likely to lead 364,000 barrels per day (bpd) and 7.7mn tonnes and world’s biggest integrated refinery and pet-
to long-term crude and per year (tpy) to the company’s net global refin- rochemicals complex.”
refined product supply ing and petrochemicals capacities. He added that while the deal was subject to
deals that will give The move follows a pledge by Reliance owner due diligence, by ensuring Aramco crude is used
Aramco a firm footing in Mukesh Ambani in June that the company as feedstock for the refinery, the deal could pay
India. would invest around $10bn in low-carbon ener- for itself within 18 months.
gies over the next three years and investments The 20% stake was to cost Aramco around
in Norwegian solar module maker REC Solar $15bn based on a Reliance O2C valuation of
(100% for $771mn) and renewables service firm $75bn. According to various well-placed sources
Sterling & Wilson Solar (40% for $379mn). speaking to financial and industry publications
Under plans to become net-zero by 2035, in recent months, the transaction was to take the
Reliance will develop a $8.2bn Dhirubhai form of an all-stock deal, the first since Aramco’s

MRPL

P4 www. NEWSBASE .com Week 47 25•November•2021