Page 6 - AsianOil Week 25 2021

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RIL to appoint Al-Rumayyan

to board ahead of deal

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

P6 www. NEWSBASE .com Week 25 24•June•2021