Aramco in talks to buy stake in refining business of India’s Reliance

FILE PHOT: An Aramco employee walks near an oil tank at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. REUTERS/Ahmed Jadallah/File Photo

Saudi Aramco, the world’s biggest oil producer, is in talks to buy a stake of at least 20 percent in the refining and petrochemicals businesses of India’s Reliance Industries Ltd, sources familiar with the matter said on Wednesday.

State-owned Aramco plans to boost investments in refining and petrochemicals to secure new markets for its crude, and sees growth in chemicals as central to its downstream strategy to lessen the risk of a slowdown in oil demand.

Aramco’s discussions with Reliance were for a roughly 20 percent stake, one source said, adding that the current thinking was to create an entity covering that part of Reliance’s refining, petrochemicals and marketing businesses.

If the deal went ahead, it could mean a boost in Aramco’s crude oil supply to Reliance by possibly more than 50 percent, the source added.

Another source said talks with Reliance were so far for a 25 percent stake.

“Reliance has offered an integrated deal – a stake in existing refineries and the planned 600,000 barrels per day (Jamnagar) refinery, along with petrochemical business,” the second source said.

The Times of India reported earlier that Aramco was in talks to buy a stake of up to 25 percent, which could be worth around $10-15 billion, valuing the Indian company’s refining and petrochemicals businesses at some $55-60 billion.

Aramco and Reliance declined to comment.

Reliance, controlled by Asia’s richest man, Mukesh Ambani, is India’s biggest refining and petrochemicals company and runs a 1.4 million bpd refining complex at Jamnagar in western India. It plans to expand capacity to 2 million bpd by 2030, according to plans shared with the Indian government.

Last year, Aramco and the United Arab Emirates’ national oil company ADNOC teamed up with state-run Indian refiners in a plan to build a 1.2 million bpd refinery and petrochemical project in Maharashtra state.

However, the planned refinery, which was initially expected to cost $44 billion, faces delays, as thousands of farmers have refused to surrender land for it and the Maharashtra government is looking to move the plant’s location.

Saudi Crown Prince Mohammed bin Salman visited India in February and said then that he expected investment opportunities worth more than $100 billion there over the next two years.

Ambani has travelled to Saudi Arabia at least twice since December, discussing joint investment among other issues with Saudi Energy Minister Khalid al-Falih and Aramco’s chief executive, Amin Nasser.

Nasser said in February that Aramco was in talks on possible investments in Indian projects with companies including Reliance.

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Reuters

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.