Page 4 - AsiaElec Week 47 2021

AsiaElec COMMENTARY AsiaElec

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

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

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