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Aramco’s RIL O2C deal

remains on the cards

FINANCE & SAUDI Aramco’s planned deal to acquire a 20% The jewel in the RIL crown is the 1.24mn bpd
INVESTMENT stake in the oil-to-chemicals (O2C) division of Jamnagar refining complex, and the acquisition
India’s Reliance Industries Ltd (RIL) is proceed- of a 20% stake in the business would add a the-
ing as planned despite a breakdown in relations oretical net refining capacity of 240,000 bpd to
between Riyadh and New Delhi. Aramco’s books.
Saudi Arabia’s raised its May official sell- In March, citing sources with intimate knowl-
ing prices (OSPs) to Asia by $0.2-0.5 per bar- edge of proceedings, India’s Economic Times
rel, with Indian authorities advising refiners said that the final deal could comprise a com-
to ramp up crude imports from the US and bination of stock and cash and these rumours
Africa. Earlier this month, Reuters quoted returned this week in reports carried by Reuters
sources as saying that India’s state-owned and the Financial Times.
refineries would buy 36% less Saudi crude in Despite having cut its 2020 capital pro-
May than usual, as New Delhi has accused gramme by around $12bn owing to the impact
Saudi and its OPEC+ partners of driving up of the COVID-19 pandemic, Aramco remains
crude prices while India attempts to recover intent on expanding dedicated markets to which
from the coronavirus (COVID-19) pandemic. it can sell crude long term.
The public refiners placed orders to buy At the time, a RIL official was quoted as say-
9.5mn barrels of crude from Aramco in May, ing: “Aramco sees Reliance O2C as the dedicated
down from the 10.8mn barrels planned previ- buyer of its crude. When the uncertainties rule
ously, according to the sources. the oil world, building a relation in one of the
However, India’s Business Today quoted largest oil-consuming countries will solidify its
sources close to proceedings as saying that the position for future.”
stand-off has not had an impact on the NOC’s In February, RIL shares rose 1.5% after
plan to buy a 20% stake in RIL’s refining, pet- reports emerged that it was finalising a deal
rochemicals and fuels marketing businesses, that would demerge its O2C business into a
known as Reliance O2C. The sources said that subsidiary that will initially be wholly owned
Aramco is serious about partnering Reliance and by the parent.
the discussions are progressing as expected. The new O2C subsidiary will be include
In August 2019, the Saudi firm signed a letter RIL’s refining and petrochemicals assets, its bulk
of intent (LoI) to purchase the stake for around wholesale marketing business, its fuel retail arm
$15bn, thereby valuing the Indian firm at $75bn. which comprises a 51% stake in a joint venture
RIL’s chairman and managing director, with BP and oil trading subsidiaries in Singapore
Mukesh Ambani, added that as part of the deal, and the UK.
his company would agree to a long-term pur- While the details of the spin-off are yet to be
chase of 500,000 barrels per day (bpd) of Ara- concluded, RIL is expected to be valued at $75-
mco crude. 85bn, including the company’s debt.™

P4 www. NEWSBASE .com Week 17 29•April•2021