Page 10 - DMEA Week 25 2021

DMEA FINANCE & INVESTMENT DMEA

Reliance to appoint Al-Rumayyan

to board ahead of Aramco deal

MIDDLE EAST INDIA’S Reliance Industries Ltd (RIL) the world’s largest oil producer and world’s
announced that Saudi Aramco chairman Yasir biggest integrated refinery and petrochemicals
Al-Rumayyan will be appointed to its board of complex.”
directors at this week’s AGM. The move comes He added that while the deal was subject to
as momentum appears to be building on the due diligence, by ensuring Aramco crude is used
delayed acquisition by Aramco of a share in Reli- as feedstock for the refinery, the deal could pay
ance’s refining, petrochemicals and fuels market- for itself within 18 months.
ing businesses. This week, Ambani said: “We look forward to
In August 2019, Aramco signed a letter of welcoming Saudi Aramco as a strategic partner
intent (LoI) to purchase a 20% stake in Reliance’s in our O2C business …I expect our partnership
oil-to-chemicals (O2C) division, which includes to be formalized in an expeditious manner dur-
the world’s largest refining complex at Jamnagar, ing this year, after obtaining required regulatory
for around $15bn, inferring the Indian firm’s val- clearances.”
uation is $75bn. He added: “Despite several challenges due to
In February this year, Reliance was reported Covid-19, we have made substantial progress in
to be finalising a deal that would demerge its the past year in our discussions.”
O2C business into a subsidiary that will initially As part of the arrangement, Reliance will
be wholly owned by the parent, with a deal antic- agree to a long-term purchase of 500,000 bar-
ipated in September, allowing the Aramco deal rels per day (bpd) of Aramco crude. This point
to move forward. alludes to the deal’s alignment with Aramco’s
The new O2C subsidiary will include Reli- broader strategy of increasing dedicated crude
ance’s refining and petrochemicals assets, its outlets which guarantee long-term buyers for its
bulk wholesale marketing business, and its fuel oil.
retail arm, which comprises a 51% stake in a joint Al-Rumayyan was made Aramco chairman
venture with BP and oil trading subsidiaries in ahead of the firm’s 2019 initial public offering
Singapore and the UK. (IPO) on the local Tadawul stock exchange and
While the talks on the mega-deal were is also governor of the Saudi Public Investment
reported to have been paused given the impact Fund (PIF).
of the coronavirus (COVID-19) pandemic, Speaking to India’s Livemint, Ravi Singhal,
Aramco CEO Amin Nasser said in August last vice-chairman at GCL Securities, said: “Once
year that “the work is still on. We will update the appointment is announced, an investment
our shareholders in due course”. Given the rel- to the tune of [$16.8bn-$20bn] would come to
ative health of oil prices in recent months have Reliance.”
allowed the company’s finances to recover sig- Meanwhile, in a research note, HSBC Global
nificantly from the woes that led it to reduce its Research said: “RIL’s AGM has historically been
2020 capital programme by around $12bn, the a keenly watched event (previously attended
Dhahran-based company is now in a better posi- by 3,000 shareholders when held in physical
tion to move forward. format and last year saw 300,000 concurrent
Reliance’s chairman and managing director viewers of the virtual AGM across 42 countries
Mukesh Ambani said at the time: “Saudi Aramco and 468 cities), given that it has been one of the
and Reliance have agreed to form a long-term top three companies by market capitalisation
partnership in our oils to chemicals division in India, has a large free float and a large public
[…] This signifies the perfect synergy between shareholding.”™

P10 www. NEWSBASE .com Week 25 24•June•2021