Page 6 - AsianOil Week 11 2021

AsianOil SOUTH ASIA AsianOil

Price boost seen expediting

Aramco’s Reliance deal

FINANCE & THE recent increase in the oil price is likely
INVESTMENT to speed up progress in the protracted efforts
by state-owned Saudi Aramco to acquire a
20% stake in India’s Reliance Industries’ (RIL)
oil-to-chemicals (O2C) division.
Sources at Reliance told India’s Business
Today that with prices hovering around $70 India’s Economic Times said that the final deal
per barrel, the resultant cash boost to Aramco could comprise a combination of stock and cash.
will help expedite proceedings. Bank of Amer- Despite having cut its 2020 capital pro-
ica estimates that if prices remain at this level, gramme by around $12bn owing to the impact
the Saudi firm will generate cash flow of around of the coronavirus (COVID-19) pandemic,
$100bn in the 2021/22 financial year, poten- Aramco remains intent on expanding dedicated
tially allowing Aramco to exceed its $75bn per markets to which it can sell crude long term.
year dividend promise. However, having leant Business Today quoted a Reliance official as
heavily on debt to fill the void last year, it appears saying: “Aramco sees Reliance O2C as the dedi-
unlikely that the company will take such a short- cated buyer of its crude. When the uncertainties
term outlook. rule the oil world, building a relation in one of
In August 2019, Aramco signed a letter of the largest oil-consuming countries will solidify
intent (LoI) to purchase a 20% stake in Reliance’s its position for future.”
refining, petrochemicals and fuels marketing In February, Reliance shares rose 1.5% after
businesses for around $15bn, thereby valuing reports emerged that it was finalising a deal that
Ambani’s company at $75bn. would demerge its O2C business into a subsid-
Reliance’s chairman and managing director iary that will initially be wholly owned by the
Mukesh Ambani added that as part of the deal, parent. The new O2C subsidiary will be include
his company would agree to a long-term pur- Reliance’s refining and petrochemicals assets, its
chase of 500,000 barrels per day (bpd) of Ara- bulk wholesale marketing business, its fuel retail
mco crude. arm, which comprises a 51% stake in a joint ven-
Downstream MEA (DMEA) reported last ture with BP, and oil trading subsidiaries in Sin-
month that talks about the potential deal were gapore and the UK.
back on track, with momentum expected to While the details of the spin-off are yet to be
pick up from April this year. Meanwhile, citing concluded, Reliance is expected to be valued at
sources with intimate knowledge of proceedings, $75-85bn, including the company’s debt.™

SOUTHEAST ASIA

Indonesia sets upstream

content targets

POLICY INDONESIA’S upstream watchdog SKK Migas make adjustments at the beginning of the pan-
has set a local content target for upstream invest- demic,” local news outlet Kontan quoted Suryadi
ment in 2021, after the coronavirus (COVID-19) as saying at a virtual event last week.
pandemic derailed last year’s target. Suryadi said contractors had compiled a pro-
The head of SKK Migas’ goods and services curement list for goods and services valued at
procurement management division, Erwin more than $6.05bn in the Centralised Integrated
Suryadi, said on March 10 that upstream pro- Vendor Database (CIVD) system. SKK Migas
curement spending had amounted to $3bn in developed CIVD in collaboration with upstream
2020, with local content providers winning contractors in 2016, with the goal of promoting
about 56% of that total. local suppliers while maintaining quality control
“[Investment] is not on target because it was through supplier registration.
the beginning of COVID-19, so it was difficult to The Energy Ministry requires upstream

P6 www. NEWSBASE .com Week 11 18•March•2021