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Reliance to sell 20% stake in oil-to-chemicals arm to Saudi Aramco

India’s Reliance Industries is set to sell a 20% stake in its oil to chemicals business to Saudi Aramco, helping the Indian conglomerate to cut debt and giving Aramco better access to a fast growing market.

While terms of the deal are yet to be finalised, Reliance will get roughly $15 billion, including some debt adjustments for the 20% stake, P.M.S. Prasad, Executive Director of Reliance Industries said on Monday, adding the two companies aim to close the deal by March 2020.

The deal will see Reliance buy up to 500,000 bpd of crude oil from Aramco to Reliance's twin refineries at Jamnagar in Gujarat,Prasad told media after the company’s annual general meeting, noting this would more than double the volumes that Reliance currently purchases from Aramco.

The deal ties in with Aramco’s push to expand its refining and marketing footprint globally by signing new deals and boosting the capacity of its plants to secure new markets for its crude oil. Saudi Arabia is keen to get a foothold in the world's fastest-growing fuel market to get a captive customer for the crude oil it produces.

Aramco is boosting its refining and petrochemicals business, particularly in Asia, and sees growth in chemicals as central to its downstream expansion strategy to reduce risk as oil demand slows. Reliance plans to expand its only-for-exports special economic zone (SEZ) refining capacity to just over 41 million tonne from current 35.2 million tonne but does not have any plans to set up a new refinery in the country.

“This signifies perfect synergy between the world’s largest oil producer and the world’s largest integrated refinery and petrochemicals complex,” said Reliance Chairman Mukesh Ambani, while announcing the deal at the AGM in Mumbai on Monday. Aramco declined to comment on the Reliance tie-up, which currently is at a nonbinding letter of intent stage. The proposed investment is subject to due diligence, and the executed definitive agreement will be subject to regulatory and other customary approvals.

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From the April 2018 issue of Hydrocarbon Processing

 

 
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