Oil producer Saudi Aramco will take a 20 per cent stake in Reliance Industries’ refining and petrochemical businesses
The terms of the deal are yet to be finalised, but company officials said Reliance will receive about US$15bn, including some debt adjustments, for the 20 per cent stake when the sale closes later this year.
The deal also includes a long-term agreement for Saudi Aramco to supply 500,000 bpd of crude oil to the joint venture assets.
Alan Gelder, vice-president refining and chemicals at the energy research firm Wood Mackenzie, said, “Our analysis indicates that the total earnings from the combined refinery sites in India are the highest in Asia outside the mega-refiners of Sinopec and PetroChina.
“Crude supplies of 500,000 bpd represent about 40 per cent of Reliance’s crude intake, significantly higher than the stake taken, although Saudi Aramco historically supplied 20 per cent of Reliance’s crude oil requirements.”
Gelder added that the deal is further evidence that Saudi Aramco is implementing its long-term strategy to increase its refining and petrochemical capacity.
“This strategy is being achieved through a combination of project and acquisitions, with this acquisition following on from last year’s acquisition of SABIC and SASREF, and the memorandum of understanding Aramco signed this year to acquire a nine per cent stake in Zhejiang Petrochemical’s 800,000 bpd integrated refinery and petrochemical complex in Zhoushan, China,” he noted.
“Saudi Aramco continues to show keen interest in accessing the Indian market, which has the strongest long-term growth prospects. Aramco is also demonstrating discipline in targeting strongly competitive assets that are well placed, through petrochemical integration, to be sustainable through the energy transition,” he concluded.
Reliance’s refining and petrochemicals assets include 1.2 mmbbl per day of highly-sophisticated refining assets in North-West India. Both refining sites are in Jamnagar and heavily integrated with petrochemicals.
Reliance also has a world-leading position in polyester and intermediates, as well as the capacity of steam crackers and polyolefins at four other locations in India.
