Saudi Aramco, the world’s largest oil company, is in active discussions to acquire a nearly 20 percent stake in Indian multinational conglomerate company, Reliance Industries’ oil refining and chemicals sector for $20 billion to $25 billion in Saudi Aramco shares.
In 2019, Reliance announced the sale of a 20 percent share in its oil-to-chemicals business to Saudi Aramco for $15 billion. However, the transaction fell through after COVID-19 caused a drop in oil prices and demand last year. If the deal goes through, Mr. Mukesh Ambani’s Reliance Industries will obtain a steady supply of crude oil for its refineries as well as a stake in Saudi Aramco.
According to reports based on Aramco’s market valuation of about $1.9 trillion, a transaction would give Reliance a stake of around 1 percent in the world’s biggest energy company.
Mr. Mukesh Ambani, the billionaire chairman of Reliance Industries, stated in late June that the Indian conglomerate hopes to formalize its partnership with Aramco this year and the Aramco Chairman Mr. Yasir Al-Rumayyan will join the Reliance’s board as an independent director.
At the start of the year, the company’s oil-to-chemicals sector faced unprecedented problems due to a severe economic downturn. But it recovered, and it was probably the only company in the world that was profitable in every quarter while operating at near full capacity.
Even during the pandemic, both the company’s continued to interact and resolve, showing a solid partnership between Saudi Aramco and Reliance. The collaboration is expected to be formalized in an expeditious manner this year.
According to analysts, a share in Reliance would ensure a reliable crude supply channel for Aramco, which faces competition from Iraq and the United States, and that Reliance, which operates one of the world’s most advanced refining projects, would still be one of the best bets in Asia for Aramco.